FINANCIAL ANALYSIS POLYPHOR · 1) Start phase I trial inhaled murepavadin (Q4 2020): with results...

15 September 2020

Please see important research disclosures at the end of this document of 33 VALUATIONLAB | [email protected] | Valuation Report | September 2020

Ride the balixafortide

New leadership delivering on renewed strategy Polyphor is focused on the discovery and development of treatments for oncology and antimicrobial resistance. Key driver is balixafortide, a first-in-class CXCR4 antagonist in phase III for metastatic breast cancer (mBC) targeting a blockbuster market opportunity. Additional indications and drug combinations could boost balixafortide’s sales potential further. The antimicrobial resistance pipeline includes a new class of OMPTA antibiotics in preclinical development, including inhaled murepavadin (P. aeruginosa infections in cystic fibrosis), POL7306/BamA (all WHO Priority 1 pathogens) and thanatin-derivatives (multidrug resistant Enterobacteriaceae). 2021 is set to be a transformational year for Polyphor upon reaching positive results of the single pivotal phase III “FORTRESS” trial of balixafortide in combination with eribulin in mBC. Estimated cash of CHF 48 mn (incl. the USD 15 mn Fosun upfront) provides cash life well into Q3 2021, which can be extended by the equity-linked IRIS agreement if needed. We calculate Polyphor will need to raise CHF ~20 mn to reach profitability in 2022/2023 assuming successful partnering with a major cancer player in H1 2022 with substantial upfront payments. We derive a sum-of-parts risk-adjusted (r)NPV of CHF 25.3/share, based on 13.7 mn shares to raise CHF 20 mn at current low share prices. We qualify Polyphor as Speculative with the need to timely secure sufficient funding. Key catalysts:

1) Start phase I trial inhaled murepavadin (Q4 2020): with results due in 2021 and POC (proof-of-concept) in P. aeruginosa infections in cystic fibrosis patients to start in 2022 (due to lack of POC not in our forecasts, yet).

2) Balixafortide phase III “FORTRESS” ORR results (Q2 2021): first major catalyst with the potential to lead to a substantial revaluation of Polyphor shares; our rNPV increases by CHF 7.3/share with a 65% (phase III, positive ORR) success rate.

3) Balixafortide phase III “FORTRESS” PFS results (Q4 2021): second major catalyst triggering a lucrative partnering agreement with a major cancer player; our rNPV increases by CHF 7.3/share with an 80% (filing) success rate

POLYPHOR VALUATIONLAB FINANCIAL ANALYSIS

FOCUS AREA: FIRST-IN-CLASS COMPOUNDS FOR TREATMENT-RESISTANT CANCER AND ANTIMICROBIAL RESISTANCEKEY DATA SIX: POLNMARKET CAPITALIZATION (CHF MN) 84 SHARE PRICE ON SEPTEMBER 15, 2020 7.6ENTERPRISE VALUE (CHF MN) 36 RISK-ADJUSTED NPV PER SHARE * (CHF) 25.3ESTIMATED CASH (1 SEPTEMBER 2020) (CHF MN) ** 48 UPSIDE/DOWNSIDE (%) 235%MONTHLY OPERATING EXPENSE (CHF MN) 4.9 RISK PROFILE SPECULATIVECASH LIFE INTO Q3 2021 SUCCESS PROBABILITY LEAD PROJECT 50%BREAK-EVEN (YEAR) 2022/2023 EMPLOYEES 52FOUNDED (YEAR) 1996 LISTED (YEAR) 2018

KEY PRODUCTS: STATUS MAJOR SHAREHOLDERS: (%)- BALIXAFORTIDE (METASTATIC BREAST CANCER) PHASE III - INGRO FINANZ AG 11.2- INHALED MUREPAVADIN (CYSTIC FIBROSIS P. AERUGINOSA) PRECLINICAL - VARUMA AG 8.6- POL7306/BAMA (GRAM-NEGATIVE BACTERIAL INFECTIONS) PRECLINICAL - CREDIT SUISSE FUND MANAGEMENT AG 6.0- THANATIN (MULTIDRUG RESISTANT ENTEROBACTERIACEAE) PRECLINICAL - EXECUTIVE MANAGEMENT 0.0- LONODELESTAT (CYSTIC FIBROSIS) - SANTHERA ROYALTIES PHASE I - FREE FLOAT 100

- DAILY VOLUME 21,416

UPCOMING CATALYSTS: DATE ANALYST(S): BOB POOLER- INHALED MUREPAVADIN - START PHASE I TRIAL Q4 2020 [email protected] BALIXAFORTIDE - OVERALL RESPONSE RATE (ORR) RATE Q2 2021 +41 79 652 67 68- BALIXAFORTIDE - PROGRESSION FREE SURVIVAL (PFS) RATE Q4 2021* NOTE: 13.7 MN SHARES USED FOR CALCULATION OF RISK-ADJUSTED NPV/SHARE, ASSUMING ADDITIONAL CHF 20 MN NEEDED TO REACH PROFITABILITY

ESTIMATES AS OF 15 SEPTEMBER, 2020 SOURCE: POLYPHOR, VALUATIONLAB ESTIMATES

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Recent Developments Since our initiation of coverage in August 2020, Polyphor’s new leadership has made significant strides in their renewed strategy. In particular, the Fosun Pharma licensing agreement for balixafortide in China was a major surprise, happening almost two years ahead of our expectations with excellent terms. Next to first and important product validation by an external partner, the upfront payment cuts our expected funding need by roughly a third to reach profitability in 2022/2023, leading to significantly less dilution in the future to raise the remaining capital in the financial markets. Despite the ongoing Covid-19 pandemic, the critical phase III “FORTRESS” trial of balixafortide in breast cancer remains on track to report results in 2021. Positive results will be transformational for Polyphor. Consequently, our sum-of-parts risk adjusted (r)NPV for Polyphor increases by 7% to CHF 25.3/share. September 3 – H1 2020 results: new leadership delivers on renewed strategy In H1 2020, the net loss amounted to CHF 27.8 mn. R&D costs were primarily driven by the balixafortide phase III “FORTRESS” trial, and are expected to decrease slightly in Q4 2020 following the closure of patient enrollment. Management guides operating expenses to range between CHF 57-59 mn for 2020 (from previously CHF 61-64 mn). H1 2020 results in a nutshell (CHF mn) H1 2020 H1 2019 Revenue: 0 0 R&D: -24.6 -25.3 M&S: -0.4 -0.5 G&A: -2.6 -2.4 Operating expenses: -27.2 -28.0 Net result: -27.8 -27.9 Cash and cash equivalents: 43.7 77.4 (31.12.2019) Cash and cash equivalents amounted to CHF 43.7 mn (30 June 2020). The majority of cash was allocated to the balixafortide program, while cystic fibrosis and antibiotics pipeline projects were largely externally funded. Based on the current cash position and the USD 15 mn upfront milestone payment from Fosun Pharma, Polyphor expects cash life to reach well into Q3 2021, sufficient to reach the next major value inflection point of “FORTRESS” ORR results expected in Q2 2020. The equity-linked financing agreement with IRIS allows additional flexibility to extend the company’s cash life if needed.

H1 2020 - Significant pipeline progress and surprise Fosun Pharma partnership “FORTRESS” phase III breast cancer trial: The phase III “FORTRESS” trial of balixafortide in metastatic breast cancer is progressing well despite the Covid-19 pandemic, with 366 (95% of total) patients randomized, comprising of 279 breast cancer patients with third line and later, and 87 second line patients, as per 31 August 2020. The first co-primary endpoint, ORR (objective response rate) results, is expected in Q2 2021. These results could potentially lead to an accelerated approval in the US. PFS (progression free survival) results, the key primary endpoint, is expected in Q4 2021. This will serve as a basis for a regular NDA (New Drug Application) filing in the US and an MAA (Marketing Authorisation Application) filing in the EU. Completion of the dossier for the NDA filing is on track to support potential breakthrough therapy designation (BTD).

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Fosun Pharma agreement for China: The exclusive development and commercialization licensing agreement for balixafortide in China with Fosun Pharma is an important and first external validation of balixafortide’s potential in cancer. The agreement happened almost two years ahead of our expectations. China represents a large market opportunity and accounts for roughly 17% of our global peak sales for balixafortide. Moreover, the excellent terms extend Polyphor’ cash life well into 2021, while cutting the funding need to reach profitability in 2022/2023 in half, leading to less potential dilution to raise capital in the financial markets. Expansion balixafortide: Polyphor is also conducting preclinical experiments with balixafortide in different combinations and plans to initiate a phase Ib/II trial in earlier lines of metastatic breast cancer in Q4 2020. Inhaled murepavadin to start phase I: After optimizing an inhaled formulation of murepavadin in the first half of the year, the CTA (clinical trial application) is expected in Q4 2020 with the start of the phase I trial shortly thereafter. The program is largely funded by the IMI (Innovative Medicines Initiative), a partnership between the EU and the European pharmaceutical industry. Inhaled murepavadin is targeted for Pseudomonas aeruginosa infections in patients with cystic fibrosis with potential peak sales of around CHF 200 mn.

August 31 – Exclusive licensing agreement with Fosun for balixafortide in China Polyphor and Fosun Pharma signed an exclusive licensing agreement for balixafortide in China, almost two years ahead of our expectations with excellent terms. Under the terms of the agreement, Polyphor and Fosun Pharma will develop and commercialize balixafortide for the Chinese market with an initial focus on metastatic breast cancer. Additional indications and combination therapies will be evaluated jointly by the companies. China represents a major market opportunity and accounts for roughly 17% of our CHF 700+ mn global peak sales forecast for balixafortide in breast cancer. Importantly, this is the first and important product validation by an external partner and underlines the potential of balixafortide in breast cancer and other potential indications or drug combinations. Fosun Pharmaceutical is a leading healthcare company in China and is listed on both the Shanghai Stock Exchange (ticker code: 600196.SH) and the Hong Kong Stock Exchange (02196.HK). We believe the terms are excellent given the phase III “FORTRESS” trial is still ongoing with results only due next year. Polyphor will receive a USD 15 mn upfront milestone payment and is eligible for USD 19 mn regulatory milestones and up to USD 148 mn commercialization milestones and tiered sales royalties starting in the low double digits increasing to mid-teens (we assume starting at 12% and gradually increasing to 16%). These are very competitive terms for a cancer compound where the phase III results are not yet known. Outside China, we expect sales royalties of only 17.5% after the phase III results are announced. These are marginally higher than what Polyphor will receive from Fosun Pharma at peak. Hence, our 17.5% sales royalty assumption may prove conservative. Importantly, the USD 15 mn upfront milestone payment cuts the required funding need by roughly a third to reach profitability in 2022/2023. Previously, we estimated Polyphor would need approximately CHF 30 mn additional funding next to substantial upfront milestones from licensing agreements for balixafortide. Consequently, this significantly reduces the potential future dilution to raise additional capital to reach profitability.

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Strategy & Cash Position Swiss biopharma focused on immuno-oncology and antimicrobial resistance Polyphor AG was founded in 1996 and is a clinical stage biopharmaceutical company that is focused on the discovery and development of first-in-class prescription drugs in immuno-oncology and antimicrobial resistance. The company is based in Allschwil, Switzerland and has currently 57 employees. All of the company’s products are derived from their proprietary macrocyclic peptide technology platform. Macrocycles are medium size molecules designed to address complex and challenging extra- and intracellular targets. Polyphor discovered a new class of antibiotics, so-called outer membrane protein targeting antibiotics (OMPTA), using its Protein Epitope Mimetics (PEM) platform. OMPTAs are characterized by a low rate of resistance development and offer new treatment options for patients with difficult-to-treat infections caused by Gram-negative bacteria (including multidrug resistant (MDR) and extensively drug-resistant (XDR) strains. OMPTAs could be the first new class of antibiotics to treat Gram-negative bacteria in over 50 years. In May 2018, Polyphor (ticker: POLN) was listed on the SIX Swiss Stock Exchange through a successful IPO (initial public offering) raising CHF 165 mn, which were primarily targeted to fund the company’s key antibiotic murepavadin I.V. towards regulatory approval in nosocomial pneumonia (severe hospital lung infection) due to Pseudomonas aeruginosa infection and further progress the development of its novel cancer drug balixafortide in metastatic breast cancer. Polyphor has a special focus on two therapeutic areas:

1. Oncology: overall survival in advanced metastatic breast cancer (mBC) remains poor despite advances in targeted hormonal and cytotoxic therapies; combining different anticancer agents that work via different mechanisms increase the likelihood of higher response rates, superior safety and efficacy and less resistance development compared to monotherapy; Polyphor’s key oncology compound is:

• Balixafortide (phase III – peak sales CHF 700+ mn) a novel immuno-oncology compound for the treatment of HER2 negative metastatic breast cancer (mBC) or roughly 85% of patients with mBC; promising results seen in proof-of-concept (POC) in patients with mBC in combination with eribulin (branded Halaven by Eisai) presented at ASCO (American Society of Clinical Oncology) in 2017; single pivotal phase III “FORTRESS” trial in patients with mBC in combination with eribulin started in mid-2019; patient enrolment on track despite Covid-19 pandemic, with first co-primary endpoint of objective response rate (ORR) to report in Q2 2021 and second co-primary endpoint of progression-free survival (PFS) to report in Q4 2021; both are key catalysts for Polyphor; positive results should trigger a lucrative partnering deal with a major cancer player in H1 2022; early external validation through an exclusive development and commercialization licensing agreement for balixafortide in China with Fosun Pharma with excellent terms in August 2020; balixafortide was granted US fast-track approval in April 2018 with the potential of breakthrough therapy designation (BTD) accelerated assessment and PRIME (PRIority MEdicine) designation in the EU; US and EU filing is expected in H1

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2022; first launches could occur in 2023; patent protection of balixafortide/eribulin combination sought for until 2038; peak sales of approximately CHF 700+ mn in metastatic breast cancer alone; new indications and other drug combinations will be assessed to expand use of balixafortide beyond metastatic breast cancer in combination with eribulin with the potential of substantially higher peak sales

2. Antimicrobial resistance: the focus is on a new class of antibiotics, OMPTAs (outer

membrane protein targeting antibiotics), addressing antimicrobial resistance, especially against Gram-negative bacteria, representing a high unmet medical need; Polyphor’s key antibiotics include:

• Inhaled murepavadin (preclinical) for treating Pseudomonas Aeruginosa infections in patients with cystic fibrosis, the leading cause of exacerbations, lung function decline and mortality in these patients; preclinical development completed suggesting broad safety margin and efficacy, submission of CTA (clinical trial application) and start of phase I trial in Q4 2020; phase II development expected to be completed by end 2022; partially financed by the EU IMI (Innovative Medicines Initiative) program, seeking additional external financing; peak sales could amount to CHF 200 - 400 mn.

• POL7306/BamA Program (preclinical) developing a new class of Gram-negative antibiotics after 50 years targeting the most resistant Gram-negative pathogens; currently in hit-to-lead/lead optimization; unique medium Gram-negative spectrum of coverage targeting WHO priority 1 pathogens with very low propensity for resistance, Polyphor targets a commercial potential of USD 900 mn; further development dependent on non-dilutive and/or external financing

• Thanatin-derivatives (preclinical) narrow spectrum Gram-negative antibiotics that belong to a new antibiotic class developed in collaboration with the University of Zurich targeting specifically Enterobacteriaceae including multidrug resistant strains with limited treatment options; potential to become gold standard; currently in hit-to-lead; Polyphor targets a commercial potential of USD 350 mn; further development dependent on non-dilutive and/or external financing

• POL6014 (phase I – global rights licensed to Santhera) for the treatment of cystic fibrosis and other neutrophilic lung diseases; global rights sold to Santhera in 2018; results phase Ib multiple ascending dose (MAD) trial in cystic fibrosis due Q4 2020 (dependent on Covid-19); Polyphor is eligible of up to CHF 121 mn milestones and tiered double-digit royalties on sales; peak sales of CHF 1 bn in cystic fibrosis alone; potential in other lung disorders associated with high hNE activity including, AAT (alpha-1 antitrypsin deficiency), NCFB (non-cystic fibrosis bronchiectasis) and ARDS (acute respiratory distress syndrome) due to Covid-19;

New leadership and renewed strategy after key antibiotic discontinued Polyphor’s strategy is to create value by building a comprehensive portfolio of first-in-class or best-in-class compounds for cancer and antimicrobial resistance stemming from its proprietary macrocyclic peptide technology platform, developing these compounds up to market approval and then either out license the commercialization rights to major pharmaceutical company or establish an own specialist sales force where attractive to retain and maximize value. The commercial strategy will be influenced by the addressable patient

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population, the degree of unmet medical need and the pricing and reimbursement practices in the different countries, among others. Initially, the novel antibiotic murepavadin I.V. (intravenous formulation) for treating nosocomial pneumonia (severe hospital lung infection) caused by Pseudomonas aeruginosa was the company’s lead compound with the highest priority. Unfortunately, the compound was discontinued due to safety findings (acute kidney injury) in the final phase III development stage in May 2019. As a result, Polyphor realigned its strategy from murepavadin I.V. and antibiotics towards balixafortide, a promising immuno-oncology compound now in pivotal phase III development. The activity in antibiotics was refocused towards the inhaled formulation of murepavadin in cystic fibrosis and the progress of the OMPTA (outer membrane protein targeting antibiotics) platform, a class on new antibiotics targeting Gram-negative bacterial infections. A restructuring was announced to create operational efficiencies. The strategic transformation is headed by a new management team. In line with the renewed strategy, organization and resources are focused on the largest opportunities in innovation and value creation. Polyphor’s key priorities for the next 12-18 months include:

1) Balixafortide / immuno-oncology pipeline: • Complete the single pivotal phase III “FORTRESS” trial of balixafortide in

combination with eribulin in patients with metastatic breast cancer, including the two co-primary endpoints of overall response rate (ORR) expected in Q2 2021 and progression-free survival (PFS) due in Q4 2021

• Expand balixafortide use in other indications or drug combinations • Realize the development plans for balixafortide in China together with Fosun Pharma • Partner balixafortide in the US and Europe with a major cancer player in return for

upfront, development and commercial milestones and royalties on net sales • Identify additional novel development candidates in the field of immuno-oncology

based on the proprietary macrocyclic technology platform

2) Inhaled murepavadin / OMPTA antibiotic pipeline: • Start phase I trial of inhaled murepavadin in cystic fibrosis: submit a clinical trial

application (CTA) in Q4 2020; phase I topline results expected in mid-2021 • Progress OMPTA antibiotic preclinical pipeline (POL7306/BamA and thanatin)

with external financing • Start phase II proof-of-concept (POC) trial of inhaled murepavadin in cystic

fibrosis in 2022 • Complete preclinical development of POL7306/BamA and thanatin OMPTA

antibiotics (2022) Almost CHF 400 mn raised since its foundation in 1996 Polyphor has been successful in raising money. Since its foundation in 1996 and prior to the IPO in 2018, the company raised approximately CHF 210 mn from a Swiss and international investor base, including Ingro Finanz, Varuma, BioMed Partners, and Rosetta Capital. In addition, several of Polyphor’s development programs have benefitted or still benefit from funding or other financial support provided by Eurostars, CTI (Commission for Technology and Innovation; now Innosuisse), The Cystic Fibrosis Foundation, the Wellcome Trust Limited and the Innovative Medicines Initiative (IMI), among others.

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Polyphor raised CHF 165 mn during its IPO in May 2018, becoming the largest biotech IPO in Switzerland since 2009 and one of the top three in Europe since 2016 in terms of proceeds raised by an issuer to finance the development of its pipeline. In July 2020, Polyphor entered into an equity-linked financing agreement with the French company IRIS, where it can raise a gross amount of up to CHF 19.3 mn over a period of two years to secure the necessary funding of balixafortide in metastatic breast cancer and assess its potential in other indications. IRIS will receive Polyphor shares to be created from the company’s conditional capital based on the interest-free mandatory convertible bonds program. IRIS is committed to buy on a monthly basis over a period of two years twenty-four tranches of CHF 800,000 of unsecured zero-coupon mandatory convertible bonds. The program can be tailor-made in terms of period and tranche size, according to Polyphor's financing needs, while the company may suspend or terminate the staggered financing. During the term of the financing, IRIS will convert each month the mandatory convertible bonds into shares at a discount to the applicable volume weighted average price (VWAP). These shares are expected to be sold on the market or in block trades. Additional funding needed to finance growth plans and to reach profitability Prior to the Fosun Pharma licensing agreement for balixafortide in China, we calculated Polyphor would need an additional CHF 30 mn funding to reach profitability in 2022/2023 in addition to signing lucrative development and commercialization agreements for balixafortide with major cancer players in return for significant upfront, regulatory and commercial milestones and royalties on sales. Polyphor surprised positively at the end of August 2020, almost two years ahead of our expectations, with the Fosun Pharma licensing agreement with excellent terms. Polyphor will receive a USD 15 mn upfront milestone payment and is eligible for up to USD 167 mn development and commercial milestones and tiered sales royalties starting in the low double digits increasing to mid-teens. The USD 15 mn upfront payment cuts our previous CHF 30 mn funding need by roughly a third to CHF 20 mn, leading to significantly less dilution to raise the additional capital to reach profitability. We assume Polyphor to receive an additional CHF 57 mn in upfront milestone payments for the remaining global rights of balixafortide in 2022, still a substantial part of the necessary funding. To account for the remaining CHF 20 mn funding gap, we conservatively calculate our per share forecasts based on 13.7 mn shares (11.05 mn shares outstanding plus an estimated 2.7 mn new shares to raise CHF 20 mn at the current low share price) to raise the remaining capital needed to reach profitability. This leads to an 24% share dilution based on the current depressed share price level, significantly lower than we previously assumed. With cash and cash equivalents of CHF 43.7 mn (30 June 2020), the USD 15 mn Fosun Pharma upfront milestone, Polyphor can fund operations well into Q3 2021, sufficient to reach the first major catalyst in Q2 2021, the ORR results of balixafortide’s pivotal phase III “FORTRESS” trial in metastatic breast cancer followed by the PFS results in Q4 2021. The equity-linked financing by IRIS can extend the company’s cash life if needed. Upon positive “FORTRESS” results, Polyphor should easily be able to replenish its cash position, in our

MONEY RAISED CHF MNPRE-IPO 210IPO (INITIAL PUBLIC OFFERING) 165CONVERTIBLE BONDS 19TOTAL RAISED 394

SOURCE: POLYPHOR, VALUATIONLAB

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view. The company should be able to raise capital in the financial markets at a considerably higher share price than at the current depressed valuation (caused by the discontinuation of murepavadin I.V. in 2019) thereby minimizing share dilution. Finally, Polyphor has other options to secure additional financing, which besides equity-based funding also includes debt financing, royalty financing or monetizing assets such as balixafortide regional rights. Life Cycle Positioning – Speculative We qualify Polyphor’s risk profile as Speculative with currently no revenues and a cash position reaching only into Q3 2021. The company will need to timely replenish its cash position to finance its growth plans. 2021 will be a transformational year for Polyphor with the pivotal phase III “FORTRESS” trial of balixafortide in metastatic breast cancer reporting the first co-primary endpoint of overall response rate (ORR) results in Q2 and the second co-primary endpoint of progression-free survival (PFS) in Q4. Positive “FORTRESS” results should trigger a lucrative partnering agreement with a major cancer player and lead to a substantial increase in Polyphor’s value, in our view (see Important Disclosures for our Risk Qualification).

~ 8-14 20 YEARS

RESEARCH & DEVELOPMENT PHASE RETURN PHASE EXPIRY

REG

ISTR

ATIO

N

PHAS

E III

PHAS

E II

PHAS

E I

PRE-

CLIN

ICAL

SAFETY DOSE EFFICACY / APPROVAL

“STAR” “CASH COW” “DOG”~10% 10% -45% 40% - 65% ~80%

BREAKEVEN

GENERICS

ß RISK-ADJUSTED DISCOUNTED CASH FLOW à

SUCCESS <5%

ANIMALS ~10s ~ 100s ~ 100s – 1,000s PTS BIO-SIMILARS

COSTS

SALESp<0.05

P/E >20x P/E ~10-15x P/E > 6-10x

“MATURE”

P/E ~ 15x

0 ADDEX

BASILEA

SANTHERA

NEWRON

COSMO

SOURCE: VALUATIONLAB

LIFE CYCLE POSITIONING – SIX-LISTED BIOTECHNOLOGY COMPANIES

MOLECULAR P.

CASSIOPEA

IDORSIA

POLYPHOR

OBSEVA

KUROS BIO.

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Valuation Overview Risk-adjusted sum-of-parts NPV points to a fair value of CHF 25.3 per share We derive a sum-of-parts risk-adjusted NPV of CHF 25.3 per share for Polyphor, conservatively based on a share dilution of 24% (13.7 mn shares) based on the current depressed market capitalization to raise CHF 20 mn to fully fund its pipeline up to profitability, with an estimated cash of CHF 3.5 per share (1 September 2020) and overhead expenses of CHF 2.6 per share, assuming a WACC of 7% (reflecting the low Swiss interest environment).

Polyphor’s key driver is currently limited to: Balixafortide in metastatic breast cancer - rNPV of CHF 24.4 per share We forecast global (US, EU, urban China, Japan) peak sales of balixafortide to amount to CHF 700+ mn in breast cancer alone. Additional indications and drug combinations could add considerably to the peak sales potential. We conservatively expect balixafortide to capture roughly 40-50% of metastatic breast cancer patients treated with eribulin, which is given as a 2nd to 5th line treatment for patients with Luminal-A (HER2-/HR+) and triple negative (HER2-/HR-) breast cancer across the globe. We account for 8 treatment cycles per patient with a cost per cycle ranging between USD 10,000 (US) and USD 2,500 (urban China) and a 90% patient compliance. We expect first launches to occur in 2023 with patent protection until 2038 provided by a balixafortide/eribulin combination patent. Upon positive pivotal phase III “FORTRESS” trial results in 2021, we expect balixafortide (excluding China) to be out licensed to a major global cancer player in H1 2022 with upfront, regulatory and commercial milestones totaling CHF 282 mn and conservative 17.5% royalties on sales. In China Polyphor is eligible to receive up to USD 167 mn regulatory and commercialization milestones and tiered sales royalties starting in the low double-digits increasing to mid-teens from Fosun Pharma. We calculate a rNPV of CHF 24.4/share for balixafortide in metastatic breast cancer, with a 50% (single pivotal phase III) success probability and a WACC of 7%. Currently no value attributed to early stage pipeline projects We have conservatively not accounted for Polyphor's early stage pipeline projects due to the lack of sufficient proof-of-concept at the moment. Polyphor's unadjusted NPV provides a "sneak preview" on what the value could amount to, if all our assumptions were reached. Balixafortide in new indications & combinations – Preclinical, launch >2025 Following the “FORTRESS” ORR results in Q2 2021, Polyphor wants to expand the use of balixafortide in metastatic breast cancer in earlier treatment lines, through combinations with

SUM OF PARTSPRODUCT INDICATION

PEAK SALES (CHF MN)

LAUNCH YEAR (EST)

UNADJUSTED NPV/SHARE * (CHF)

SUCCESS PROBABILITY

RNPV/SHARE * (CHF)

PERCENTAGE OF TOTAL

BALIXAFORTIDE ADVANCED BREAST CANCER 736 2023 48.9 50% 24.4 88%MUREPAVADIN (INHALED) CYSTIC FIBROSIS P. AERUGINOSA INFECTIONS 188 >2025 7.1 0% 0.0 0%POL7306/BAMA GRAM-NEGATIVE BACTERIAL INFECTIONS TBD >2025 TBD 0% 0.0 0%THANATIN GRAM-NEGATIVE BACTERIAL INFECTIONS TBD >2025 TBD 0% 0.0 0%LONODELESTAT (SANTHERA ROYALTIES) CYSTIC FIBROSIS 1,008 >2025 9.7 0% 0.0 0%ESTIMATED CASH POSITION (1 SEPTEMBER 2020) 48 3.5 3.5 12%TOTAL ASSETS 69.2 27.9 100%OVERHEAD EXPENSES -2.6 -2.6

NPV/SHARE (CHF) 66.6 25.3SHARE PRICE ON SEPTEMBER 15, 2020 7.6PERCENTAGE UPSIDE / (DOWNSIDE) 235%* NOTE: 13.7 MN SHARES USED FOR CALCULATION OF RISK-ADJUSTED NPV/SHARE, ASSUMING ADDITIONAL CHF 20 MN NEEDED TO REACH PROFITABILITY

ESTIMATES AS OF 15 SEPTEMBER, 2020 SOURCE: VALUATIONLAB ESTIMATES

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other immune-oncology therapies as well as expand the use in other indications. CXCR4 expression has been validated as a negative prognostic factor for other cancer types than just breast cancer. This could provide substantial upside to our global peak sales for balixafortide. Therefore, when Polyphor out licenses the balixafortide rights to a major cancer player, we assume the company will seek a development and commercialization partner not just for breast cancer, but to fully develop balixafortide in different indications and drug combinations to maximize the value. Inhaled murepavadin P. aeruginosa in cystic fibrosis – Preclinical, launch >2025 Inhaled murepavadin is targeted to treat Pseudomonas aeruginosa infections in cystic fibrosis. The compound has completed preclinical development, with Polyphor planning to file a clinical trial application (CTA) and start phase I development in Q4 2020. Phase I results are expected in 2021 with the compound expected to be phase II ready at the end of 2022, when we will include it into our forecasts. Inhaled murepavadin has potential for orphan drug designation (ODD) providing 7 years (US) and 10 years (EU) market exclusivity upon approval. Peak sales could amount to CHF 200 – 400 mn. POL7306/BamA in gram-negative bacterial infections – Preclinical, launch >2025 POL7306/BamA, a preclinical OMPTA antibiotic, has a unique medium Gram-negative spectrum of coverage targeting WHO priority 1 pathogens such as Enterobacteriaceae, P. aeruginosa and Acinetobacter baumannii, which are the leading cause of severe infections globally. Many of these strains are becoming resistant to most, and in some cases to all commonly used antibiotics. The POL7306/BamA preclinical program is complete, however, the company will switch to a new formulation/peptide design to improve therapeutic margins and is currently in hit-to-lead/lead optimization. Polyphor sees a market potential of USD 900 mn for POL7306/BamA. Thanatin-derivatives in Gram-negative bacterial infections – Preclinical, launch >2025 Thanatin has a narrow spectrum Gram-negative antimicrobial activity against carbapenem-resistant Enterobacteriaceae and was shown to target LptA. Polyphor believes that optimized derivatives of thanatin could become the gold standard in treating suspected/confirmed extensively drug-resistant (XDR) Enterobacteriaceae in patients with limited treatment options and sees a market potential of USD 350 mn. The compounds are currently in hit-to-lead preclinical development. Lonodelestat in cystic fibrosis (out licensed to Santhera) – Phase I, launch >2025 In February 2018, Polyphor sold the exclusive global rights for lonodelestat (POL6014) to Santhera. Polyphor is entitled to up to CHF 121 mn in regulatory, development and sales milestones and tiered royalties up to 10% on lonodelestat sales. Lonodelestat is a novel, selective human neutrophil elastase (hNE) inhibitor for treating cystic fibrosis and other rare lung disorders. Cystic fibrosis is a rare genetic and progressive disorder that affects mostly the lungs, but also the pancreas, liver, kidneys and intestine, and affects approximately 70,000 patients globally. In October 2018, Santhera started a phase Ib multiple ascending dose (MAD) trial in cystic fibrosis patients with results due in Q4 2020 (dependent on Covid-19). Assuming lonodelestat captures a conservative 15% of the market with a USD 70,000 to USD 100,000 annual treatment price, peak sales could easily amount to approximately CHF 1 bn for cystic fibrosis alone. Additionally, disbalanced neutrophil activity is associated with a large number of inflammatory diseases, which could add to the market potential such as AAT (alpha-1 antitrypsin deficiency), NCFB (non-cystic fibrosis bronchiectasis) and ARDS (acute respiratory distress syndrome) as a result of Covid-19 infection.

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Sensitivities that can influence our valuation Funding risk: With a cash position of CHF 43.7 mn (30 June 2020), the USD 15 mn upfront payment from Fosun Pharma, Polyphor can fund operations well into Q3 2021, sufficient to reach the first major catalyst in 2021, the ORR results of the pivotal “FORTRESS” trial of balixafortide in mBC expected in Q2 2021. The equity-linked financing agreement by IRIS can extend cash life if needed. Beyond this period, we calculate Polyphor will need additional funding of approximately CHF 20 mn to reach profitability in 2022/2023 assuming successful partnering of balixafortide (excluding China) to a major cancer player in return for substantial upfront, regulatory and commercial milestones and royalties on sales in 2022. Development risk: Balixafortide is in pivotal phase III development in metastatic breast cancer, which justifies a 50% historical success probability. A strong cancer player is needed to develop balixafortide up to its full commercial potential including additional indications and drug combinations. Polyphor’s novel OMPTA antibiotic pipeline is still in preclinical development where historical success rates are typically lower than 5% and therefore not yet included into our forecasts. Commercialization risk: Polyphor does not have an own sales organization to commercialize balixafortide or its antibiotic pipeline. Following the pivotal “FORTRESS” results, the company plans to seek a global development and commercialization partner, excluding China, where Fosun Pharma will develop and commercialize balixafortide. Delays could occur and terms could be lower than our forecasts. Market penetration and sales uptake will be dependent on the marketing muscle of its commercialization partner(s) and potential new market entrants. Pricing and reimbursement risk: Following approval in the EU, pricing and reimbursement have to be negotiated with each individual member state. In the US, pricing is more straightforward. Cancer drugs such as balixafortide typically command a high price and are given often together with other highly priced cancer drugs. Pricing could be lower, and reimbursement negotiations could take longer than forecast. Manufacturing risk: Polyphor does not have any manufacturing facilities nor has plans to establish these. The company will continue to rely on third-party contract manufacturers for preclinical and clinical testing. We assume the development and commercialization partner for balixafortide will be responsible for commercial supplies through its own manufacturing facilities or a third-party contract manufacturer. Intellectual property risk: Polyphor’s macrocycle platforms PEMfinder and MacroFinder have resulted in 47 patent families comprising over 500 patents and patent applications across more than 50 countries, which are directed to compounds, formulations, processes and uses. Balixafortide is protected by 10 patent families related to CXCR4 antagonists. Its composition of matter patent (WO2008/104090) expires in 2027 (EP) and 2028 (US), but is eligible for patent term extensions of up to 5 years in EU by SPC (Supplementary Protection Certificate) and US by PTE (Patent Term extension), while a balixafortide/eribulin combination patent would expire in 2038.

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Catalysts

CATALYST TIMELINESTIME LINE PRODUCT INDICATION MILESTONE / EVENT COMMENT

IMPACT ONRNPV

202023 JAN NEW CEO GÖKHAN BATUR APPOINTED NEW CEO, A FORMER MERCK & CO

EXECUTIVE, SUCCEEDING RETIRING LONG-STANDING CEO GIACOMO DINEPI

20 FEB RENEWED STRATEGY COMPLETION BALIXAFORTIDE PHASE III BREAST CANCER TRIAL ON TRACK AND PRIORITIZED; RENEWED STRATEGY FOR DEVELOPING INNOVATIVE ANTIBIOTICS WITH FOCUS ON FORMULATION AND PEPTIDE DESIGN OPTIMIZATION; ADVANCE INHALED MUREPAVADIN TO PHASE I IN CYSTIC FIBROSIS

30 MAR BALIXAFORTIDE METASTATIC BREAST CANCER POSITIVE DSMB RECOMMENDATION

DATA SAFETY MONITORING BOARD (DSMB) RECOMMENDS CONTINUATION OF PIVOTAL PHASE III "FORTRESS" TRIAL OF BALIXAFORTIDE IN ADVANCED BREAST CANCER WITHOUT MODIFICATIONS;

28 APR FY 2019 RESULTS CASH AND CASH EQUIVALENTS (31 DEC 2019) OF CHF 77.4 MN SUFFICIENT INTO Q1 2021; TOTAL LOSS OF CHF 64.7 MN, R&D COSTS OF CHF 60.7 MN (+36%) DRIVEN BY MUREPAVADIN "PRISM" PHASE III TRIAL AND BALIXAFORTIDE "FORTRESS" PIVOTAL PHASE III TRIAL; "FORTRESS" TRIAL ON TRACK DESPITE COVID-19 PANDEMIC, TOPLINE PFS RESULTS EXPECTED Q4 2021

14 MAY BALIXAFORTIDE METASTATIC BREAST CANCER PHASE I ABSTRACT AT ASCO ABSTRACT OF PHASE I TRIAL OF BALIXAFORTIDE IN HER2-NEGATIVE METASTATIC BREAST CANCER ACCEPTED FOR THE AMERICAN SOCIETY OF CLINICAL ONCOLOGY (ASCO) 2020 VIRTUAL MEETING

4 JUN AGM ALL BOARD PROPOSALS APPROVED INCLUDING RENEWAL AUTHORIZED SHARE CAPITAL (UP TO 5,531,603 SHARES), CREATION CONDITIONAL SHARE CAPITAL BONDS AND SIMILAR DEBT INSTRUMENTS (UP TO 2.212.641 SHARES), INCREASE CONDITIONAL CAPITAL EMPLOYEE BENEFITS (BY 300,00 SHARES); BOARD MEMBERS, KUNO SOMMER (CHAIRMAN), BERNARD BOLLAG, SILVIO INDERBITZEN, ANDREAS WALLNÖFER RE-ELECTED FOR ANOTHER YEAR

28 JUL FUNDING IRIS EQUITY-LINKED FINANCING AGREEMENT PROVIDES SHORT-TERM CASH INFUSION EXPANDING CASH REACH UNTIL MID 2021

3 AUG BALIXAFORTIDE METASTATIC BREAST CANCER POSITIVE DSMB RECOMMENDATION

SECOND DSMB (DATA SAFETY MONITORING BOARD) RECOMMENDATION TO CONTINUE PIVOTAL PHASE III "FORTRESS" TRIAL WITHOUT MODIFICATIONS; 339 PATIENTS HAVE BEEN ENROLLED; CO-PRIMARY ENDPOINTS: 1) OVERALL RESPONSE RATE (ORR) RESULTS DUE h1 2021, 2) PROGRESSION-FREE SURVIVAL (PFS) RESULTS DUE Q4 2021

31 AUG BALIXAFORTIDE METASTATIC BREAST CANCER EXCLUSIVE LICENSING AGREEMENT WITH FOSUN PHARMA FOR CHINA

EXCLUSIVE DEVELOPMENT AND COMMERCIALIZATION LICENSING AGREEMENT WITH FOSUN PHARMA FOR BALIXAFORTIDE IN CHINA; POLYPHOR RECEIVED A USD 15 MN UPFRONT PAYMENT, IS ELIGIBLE FOR UP TO USD 19 MN DEVELOPMENT AND USD 148 MN SALES MILESTONES AND TIERED SALES ROYALTIES STARTING IN LOW DOUBLE-DIGITS INCREASING TO MID-TEENS

3 SEP H1 2020 RESULTS FUNDED WELL INTO Q3 2021 WITH CASH OF 43.7 MN (30 JUNE 2020) AND USD 15 MN FOSUN UPFRONT MILESTONE; EQUITY-LINKED IRIS AGREEMENT PROVIDES ADDITIONAL FLEXIBILITY IF NEEDED; H1 2020 OPERATING LOSS CHF 27.8 MN PRIMARILY DRIVEN BY "FORTRESS" TRIAL (366 PTS. ENROLLED); 2020 OPEX GUIDANCE OF CHF 57-59 MN

H2 BALIXAFORTIDE METASTATIC BREAST CANCER PHASE III "FORTRESS" TRIAL COMPLETE ENROLMENT

COMPLETE ENROLMENT OF "FORTRESS" PHASE III TRIAL IN 384 PATIENTS WITH ADVANCED BREAST CANCER TREATED WITH ERIBULIN +/- BALIXAFORTIDE

Q4 MUREPAVADIN (INHALED) CYSTIC FIBROSIS P. AERUGINOSA INFECTION

PHASE I - START START PHASE I TRIAL IN CYSTIC FIBROSIS PATIENTS WITH P. AERUGINOSA INFECTIONS TO DETERMINE SAFETY AND OTHER PHARMACO-DYNAMIC/KINETIC ASPECTS


CTA FILING FILING OF CLINICAL TRIAL APPLICATION (CTA) TO START PHASE I TRIAL

Q4 BALIXAFORTIDE METASTATIC BREAST CANCER PHASE II - NEW COMBO'S IN EARLIER STAGES

START PHASE II TRIAL OF BALIXAFORTIDE IN COMBINATION WITH OTHER CHEMOTHERAPIES (E.G. TAXANES) IN EARLIER METASTATIC BREAST CANCER

2021

Q2 BALIXAFORTIDE METASTATIC BREAST CANCER PHASE III "FORTRESS" TRIAL ORR RESULTS

OVERAL RESPONSE RATE (ORR) RESULTS OF "FORTRESS" PHASE III TRIAL IN 384 PATIENTS WITH ADVANCED BREAST CANCER TREATED WITH ERIBULIN +/- BALIXAFORTIDE

+CHF 7.3

Q2 LONODELESTAT (POL6014) CYSTIC FIBROSIS START POC TRIAL START PHASE IIA PROOF-OF-CONCEPT TRIAL IN CYSTIC FIBROSIS PATIENTS (ON SUFFICIENT FUNDING BY SANTHERA)

+CHF 1.5


PHASE I - RESULTS RESULTS OF PHASE I TRIAL IN CYSTIC FIBROSIS PATIENTS WITH P. AERUGINOSA INFECTIONS TO DETERMINE SAFETY AND OTHER PHARMACO-DYNAMIC/KINETIC ASPECTS

Q4 BALIXAFORTIDE METASTATIC BREAST CANCER PHASE III "FORTRESS" TRIALPFS RESULTS

PROGRESSION-FREE SURVIVAL (PFS) RESULTS (PRIMARY ENDPOINT) OF "FORTRESS" PHASE III TRIAL IN 384 PATIENTS WITH ADVANCED BREAST CANCER TREATED WITH ERIBULIN +/- BALIXAFORTIDE

+CHF 7.3


PHASE II - START START PHASE II TRIAL IN CYSTIC FIBROSIS PATIENTS WITH P. AERUGINOSA INFECTIONS

+CHF 1.1

2022

Q2 BALIXAFORTIDE METASTATIC BREAST CANCER PARTNERING OUTLICENSE DEVELOPMENT AND COMMERCIALIZATION RIGHTS TO A MAJOR CANCER PLAYER IN RETURN FOR SIGNIFICANT UPFRONT, DEVELOPMENT AND COMMERCIALIZATION MILESTONES AND ROYALTIES ON SALES

H1 BALIXAFORTIDE METASTATIC BREAST CANCER US & EU FILING US FILING FOR APPROVAL IN METASTATIC BREAST CANCER; US: POTENTIAL FOR BREAKTHROUGH THERAPY DESIGNATION OR ACCELERATED APPROVAL; EU: ACCELERATED ASSESSMENT EXPECTED

+CHF 4.9

Q3 BALIXAFORTIDE METASTATIC BREAST CANCER PHASE II - NEW COMBO'S IN EARLIER STAGES

RESULTS PHASE II TRIAL OF BALIXAFORTIDE IN COMBINATION WITH OTHER CHEMOTHERAPIES (E.G. TAXANES) IN EARLIER METASTATIC BREAST CANCER


PHASE II - RESULTS RESULTS PHASE II TRIAL IN CYSTIC FIBROSIS PATIENTS WITH P. AERUGINOSA INFECTIONS

+CHF 1.4

ESTIMATES AS OF 15 SEPTEMBER, 2020 SOURCE: POLYPHOR, VALUATIONLAB ESTIMATES

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Technology & Pipeline Proprietary macrocycle platform applicable for many therapeutic areas and targets Polyphor’s clinical development pipeline and product candidates originate from its proprietary macrocycle-based discovery platform consisting of: • PEMfinder: Protein Epitope Mimetics (PEM) are conformationally constrained

cyclopeptides mimicking the biologically most relevant protein surface epitopes such as the b-hairpin and a-helix motifs. PEMfinder is a highly diverse library derived from sequences of many bioactive peptides including peptide hormones, ligands of G-protein coupled receptors (GPCRs) and ion channels, and host defense peptides.

• MacroFinder: The MacroFinder concept is based on non-peptidic, cell-permeable and

orally bioavailable macrocycles which can address complex and challenging intracellular targets.

Macrocycles are medium size cyclic molecules with a molecular weight (MW)-range of between 500 and 2,000 MW that complement the chemical space between small molecules (100-500 MW) and large molecules or so-called biopharmaceuticals (10,000-200,000 MW) and were designed to address complex and challenging extra- and intracellular biological targets with high unmet medical need. Polyphor’s macrocycle platform is applicable for many therapeutic areas and different target product profiles. The company’s macrocycle library consists of over 50,000 single, untagged, individually purified peptidic and non-peptidic macrocycles readily amenable to all screening formats (binding, enzymatic, cellular pathway, phenotypical et cetera). By screening the PEMfinder library and applying PEM technology, promising hits and leads were discovered and optimized, and further developed to clinical-stage compounds including murepavadin I.V., balixafortide and lonodelestat/POL6014 (global rights sold to Santhera) as well as the OMPTA (Outer Membrane Protein Targeting Antibiotics) class of antibiotics targeting Gram-negative infections with high unmet medical need. Polyphor established macrocycle research partnerships with Novartis (2010), Boehringer Ingelheim (2012), Taisho (2015), Gilead (2016) and other companies to identify novel compounds against targets of the partners’ interest. Pipeline consisting of phase III oncology compound and preclinical antibiotics Quite remarkable for a company of its size, all of Polyphor’s pipeline projects originate from its own proprietary macrocycle-based discovery platform, currently consisting of a phase III oncology compound the first-in-class CXCR4 antagonist balixafortide and three novel OMPTA class antibiotics, inhaled murepavadin, POL7306/BamA and a thanatin derivative for difficult-to-treat Gram-negative bacterial infections. Polyphor received a USD 15 mn upfront payment and is eligible for up to USD 167 mn in development and commercialization milestones and tiered royalties starting in the low double digits increasing to mid-teens from Fosun Pharma, which acquired the rights for balixafortide in China in August 2020. Inhaled murepavadin is expected to start clinical development with a planned phase I trial to start in Q4 2020. Additionally, Polyphor is entitled to milestone payments and royalties on sales for lonodelestat (POL6014) from Santhera, which acquired the global rights from Polyphor in February 2018.

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Polyphor’s key pipeline projects include: 1) Oncology pipeline: CXCR4 is a key target in cancer growth and metastasis with large promise Polyphor’s immuno-oncology pipeline is focused on blocking the CXCR4 (C-X-C motif chemokine receptor 4) with its key compound balixafortide. CXCR4 is a chemokine receptor crucial in tumor progression and has been expressed in various types of cancers including breast cancer and others. Overexpression of CXCR4 promotes tumor growth through increased signalling pathways, angiogenesis (new blood vessel formation), metastastis and immune cell modulation. CXCR4-positive tumors often grow faster than CXCR4-negative tumors, while lymph node metastasis and distant organ metastasis frequently occur in CXCR4-positive tumor cases. CXCR4 is considered to be a factor of poor prognosis in cancer. Consequently, CXCR4 is a key target in cancer growth and metastasis. Sanofi’s Mozobil (plerixafor) is the first approved CXCR4 antagonist. Mozobil was approved in the US (2008) and the EU (2009) to be used in combination with a granulocyte-colony stimulating factor (G-CSF) to mobilize hematopoietic stem cells to the peripheral blood for collection and subsequent autologous transplantation in patients living with multiple myeloma. Sales of Mozobil amounted to EUR 222 mn in 2019. • Balixafortide a first-in-class CXCR4 antagonist in phase III for mBC

Balixafortide is a potent and selective CXCR4 antagonist targeted to improve treatment outcomes in cancer in combination with chemotherapy and cancer immunotherapy. Balixafortide is currently the most advanced CXCR4 antagonist in clinical development for solid tumors. Promising data was seen in a phase Ib proof-of-concept (POC) trial of balixafortide in combination with the chemotherapy eribulin (branded Halaven by Eisai) in patients with advanced metastatic breast cancer. In March 2018, Polyphor established a development pathway with the FDA for US approval of balixafortide in combination with eribulin in patients with HER2-negative metastatic breast cancer who have previously received at least two chemotherapeutic regimens by conducting a single pivotal phase III trial dubbed “FORTRESS” in 384 patients. After failure of chemotherapy, there is no established standard of care for HER2-negative patients with metastatic breast cancer. Polyphor may file for accelerated approval upon strong overall response rate (ORR) results expected in Q2 2021. Full approval would be based on the magnitude of progression-free survival (PFS) expected in Q4 2021. In August 2020, Polyphor announced a second positive Data and Safety Monitoring Board (DSMB) recommendation to continue the “FORTRESS” trial without modifications. The trial is on track with 366 (95% of total) patients enrolled. Fast track designation for the balixafortide/eribulin combination treatment in metastatic breast cancer was granted by the FDA in April 2018.

PRODUCT PIPELINEPRODUCT DRUG CLASS INDICATION STATUS

LAUNCH YEAR PARTNER PEAK SALES

BALIXAFORTIDE CXCR4 INHIBITOR METASTATIC BREAST CANCER INCL. TRIPLE NEGATIVE BREAST CANCER

PHASE III 2023 FOSUN PHARMA (CHINA) US/EU/JAPAN AFTER PFS RESULTS

CHF 700+ MN

MUREPAVADIN (INHALED) OMPTA CLASS* ANTIBIOTIC CYSTIC FIBROSIS P. AERUGINOSA INFECTIONS

PRECLINICAL >2025 TBD CHF 200 MN

POL7306/BAMA OMPTA CLASS* ANTIBIOTIC GRAM-NEGATIVE BACTERICAL INFECTIONS

PRECLINICAL >2025 TBD TBD

THANATIN OMPTA CLASS* ANTIBIOTIC MULTIDRUG-RESISTANT ENTEROBACTERIACEAE

PRECLINICAL >2025 TBD TBD

LONODELESTAT (POL6014) HUMAN NEUTROPHIL ELASTASE INHIBITOR

CYSTIC FIBROSIS PHASE I >2025 GLOBAL RIGHTS ACQUIRED BY SANTHERA IN 2018

CHF 1 BN

* OMPTA = OUTER MEMBRANE PROTEIN TARGETING ANTIBIOTICESTIMATES AS OF 15 SEPTEMBER, 2020 SOURCE: POLYPHOR, VALUATIONLAB ESTIMATES

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We forecasts global peak sales of CHF 700+ mn for balixafortide in metastatic breast cancer, alone (for details see page 17). Based on balixafortide’s mechanism of action, further upside potential could come from other treatment combinations and other indications.

2) Antibiotics pipeline: OMPTA class antibiotics possibly the first new class of antibiotics in over 50 years Polyphor’s antibiotic pipeline is based on so-called outer membrane protein targeting antibiotics (OMPTAs), an entirely new class of antibiotics targeting difficult-to-treat Gram-negative bacterial infections. Polyphor’s OMPTA compounds could become the first new class of antibiotics to reach the market in over 50 years. OMPTA compounds are macrocyclic protein epitope mimetics (PEMs) targeting specifically lipopolysaccharides and outer-membrane proteins found on the outer membrane of Gram-negative bacteria and lack activity against Gram-positive bacteria. OMPTAs are bactericidal (kill bacteria), show low propensity to generate resistance and have a novel mechanism of action. Inhaled murepavadin specifically targets a single pathogen, while POL7306/BamA and thanatin derivatives are medium-spectrum OMPTAs targeting multiple Gram-negative pathogens. Some essential outer-membrane proteins are highly conserved among most WHO priority 1 Gram-negative pathogens where these antibiotics have a high propensity to interact with these proteins. The novel mechanism of action of Polyphor’s OMPTAs, overcoming the barrier of the outer membrane of Gram-negative bacteria, provides for the potential to develop highly effective antibiotics against which bacteria may only slowly build resistance and may fill an important gap in the current arsenal of antibiotics. The OMPTA program is currently being funded internally and from grant money obtained from various institutions such as Innosuisse (formerly the Swiss Commission of Technology and Innovation) and The Wellcome Trust, among others. • Inhaled murepavadin for P. aeruginosa infections in patients with cystic fibrosis

Murepavadin is Polyphor’s most progressed antibiotic of the OMPTA class. Unfortunately, the intravenuous formulation, murepavadin I.V., which was in phase III development for severe hospital lung infections had to be discontinued due to kidney injury in 2019. Fortunately, the company is also developing an inhaled formulation of murepavadin for the treatment of chronic Pseudomonas aeruginosa infections in patients with cystic fibrosis and non-cystic fibrosisbronchiectasis. Cystic fibrosis, a progressive genetic disease that causes lung damage leading to persistent lung infections affecting an estimated 70,000 people globally and non-cystic fibrosis bronchiectasis, a chronic progressive respiratory disorder characterized by abnormally dilated airways and recurrent lung infections affecting an estimated 250,000 people globally are classified as orphan (rare) diseases. Orphan drug designation (ODD) provides 7 years market exclusivity in the US and 10 years in the EU, presenting an attractive orphan drug market opportunity. Peak sales of current in-market treatments for cystic fibrosis and non-cystic fibrosis range between USD 200 – 400 mn. In preclinical trials, inhaled murepavadin demonstrated that it is highly potent at low doses with a high safety margin (at least 5- to 10-fold above the intravenous formulation), has rapid bacterial properties with best in vitro activity against P. aeruginosa including

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multidrug resistant (MDR) and extensively drug-resistant (XDR) strains, a low propensity to resistance an no cross-resistance with other antibiotics. Polyphor plans to submit a CTA (clinical trial application) and start phase I development in Q4 2020. Results would be due in 2021 and be phase II ready by end 2022. The company is seeking additional external financing while the phase I program is already partly funded up to 50% by the EU Innovative Medicines Initiative (IMI) until 2021. Peak sales could amount to CHF 200 – 400 mn.

• POL7306/BamA targeting WHO priority 1 pathogens

POL7306/BamA, a preclinical OMPTA antibiotic, has a unique medium Gram-negative spectrum of coverage targeting WHO priority 1 pathogens such as Enterobacteriaceae, P. aeruginosa and Acinetobacter baumannii, which are the leading cause of severe infections globally. Many of their strains are becoming resistant to most, and in some cases to all commonly used antibiotics. POL7306/BamA has demonstrated potent in vitro activity against a large collection of Gram-negative organisms collected worldwide that included colistin-resistant, XDR and ESBL- and carbapenemase-producing isolates for which there are currently limited treatment options. The compound has demonstrated low cytotoxicity and nephrotoxicity and a very low propensity for resistance. The POL7306/BamA preclinical program is complete, however, Polyphor will switch to a new formulation/peptide design to improve therapeutic margins and is currently in hit-to-lead/lead optimization. Polyphor sees a market potential of CHF 900 mn.

• Thanatin-derivatives – a potential golden standard for XDR Enterobacteriaceae

Polyphor is progressing the development of new thanatin derivatives, which may lead to another family of compounds inhibiting the outer membrane assembly of Gram-negative pathogens through a different mechanism than other its other OMPTAs. The compound is a narrow spectrum Gram-negative antibiotic specifically targeting the treatment of serious bacterial infections caused by carbapenem-resistant Enterobacteriaceae. Polyphor believes the thanatin derivatives could become the gold standard in treating suspected/confirmed XDR Enterobacteriaceae in patients with limited treatment options and sees a market potential of CHF 350 mn. The compound is currently in hit-to-lead preclinical development.

• Lonodelestat in cystic fibrosis – Polyphor entitled to milestones and royalties

Lonodelestat (POL6014) is a novel, highly potent, selective and reversible inhibitor of human neutrophil elastase (hNE), one of the major lung-tissue degrading enzymes under pathological conditions and leading to respiratory decline and exacerbations in cystic fibrosis patients. Chronic inflammation is thought to be caused by neutrophil elastase from neutrophils present in the lung due to the buildup of thick mucus. High levels of hNE have been detected in cystic fibrosis sputa and these high levels of hNE correlate with disease severity and measured by functional lung parameters such as FEV1 reduction and are therefore important surrogate markers of disease. We believe lonodelestat could achieve peak sales of CHF 1 bn in cystic fibrosis. Global rights were sold to Santhera (ticker: SANN) in February 2018. Polyphor is eligible up to CHF 121 mn in development, regulatory and sales milestones and tiered royalties up to 10% on sales from Santhera. In Q4 2020, Santhera expects to report multiple ascending dose (MAD) results.

In the following section we will provide an in-depth analysis and forecasts for Polyphor's key driver balixafortide in metastatic breast cancer.

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Forecasts & Sensitivity Analysis Balixafortide (metastatic Breast Cancer - mBC) Product Analysis Balixafortide in mBC - Peak sales of CHF 700+ mn; rNPV of CHF 24.4/share We forecast global peak sales of CHF 736 mn for balixafortide in patients with metastatic breast cancer assuming US and EU approval and launch in 2023 and launches in Japan and China to occur approximately 2 years later with patent life reaching until 2038 when the balixafortide/eribulin combination patent expires. Balixafortide is targeted to be used in metastatic HER2 negative breast cancer from 2nd to 5th treatment lines in combination with eribulin chemotherapy. We assume 8 treatment cycles, a treatment cost per cycle of USD 10,000 (US), EUR 4,000 (EU), USD 4,000 (Japan), USD 2,500 (China), a conservative 50% target market penetration in the US and 40% in the other regions, and patient compliance of 90%. We expect Polyphor to out license balixafortide’s global rights (excluding China) on positive single pivotal phase III “FORTRESS” trial results to a major cancer player in return for up to CHF 282 mn in upfront, regulatory and commercial milestone payments and 17.5% royalties on sales. In China, Polyphor received a USD 15 mn upfront milestone and is eligible for up to USD 167 mn development and commercialization milestones and tiered royalties starting from low double digits increasing to mid-teens from Fosun Pharma. Our rNPV amounts to CHF 335 mn, or CHF 24.4 per share with a 50% (single pivotal phase III) success rate and a WACC of 7% (for details see page 26). Potential blockbuster (breast) cancer compound in phase III Balixafortide, a first-in-class CXCR4 antagonist (blocker), is Polyphor’s most advanced pipeline project currently in phase III development and was originated from its own proprietary macrocyclic peptide technology platform. We forecast balixafortide peak sales to reach CHF 700+ mn in breast cancer alone. Additional indications and drug combinations should expand its peak sales potential substantially. Balixafortide is in pivotal phase III development in its first indication of metastatic breast cancer with results due in 2021, first launches expected in 2023 with extensive patent protection until 2032 (EU including SPC) and 2033 (US including PTE) and additional patent protection sought for balixafortide/eribulin combination until 2038. Successful development of balixafortide is critical for Polyphor after late stage hospital antibiotic murepavadin I.V., an intravenous treatment for severe hospital lung infections had to be discontinued in 2019, which led to new leadership and a renewed strategic focus. We believe the new management team is clearly delivering on its renewed strategy as demonstrated by the recently announced exclusive licensing agreement for balixafortide in China with Fosun Pharma, almost 2 years ahead of our expectations, with excellent terms that cuts Polyphor’s funding need by roughly a third to reach profitability. 2021 will be a pivotal year for Polyphor on positive “FORTRESS” trial results 2021 will be a pivotal year for Polyphor when the single pivotal phase III “FORTRESS” trial of balixafortide in combination with chemotherapy eribulin in patients with metastatic breast cancer reports topline results. In Q2 2021, results of the first co-primary endpoint, overall response rate (ORR) are due to report, followed by the second co-primary endpoint, progression-free survival (PFS) in Q4 2021. Upon strong ORR results, Polyphor could

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potentially file for accelerated approval in the US (fast-track designation granted by the FDA in April 2018). The company will then seek a global development and commercialization partner (excluding China where Fosun Pharma has exclusive rights for China) for balixafortide in return for substantial upfront, regulatory and commercialization milestones and royalties on sales. This would help replenish the company’s cash position. Additional indications and different drug combinations should expand the peak sales and value of balixafortide substantially beyond our forecasts, however, require substantial investment by Polyphor’s future partner(s). Balixafortide firstly targets HER2-negative breast cancer market valued at USD 8 bn Balixafortide is the most advanced CXCR4 antagonist, which was first to demonstrate proof-of-concept in solid tumors. Moreover, it is the only CXCR4 antagonist in development for breast cancer targeting a HER2-negative breast cancer market valued at almost USD 8 bn in 2018, which is set to increase by a CAGR of 5.5% to approximately USD 13 bn in 2028 according to GlobalData. Breast cancer is the most common cancer among women worldwide, representing more than 2 mn new cases and 600,000 deaths in 2018. It is estimated that in the US there will be 275,928 newly diagnosed breast cancer patients in 2020. While an increasing number of patients may be cured by a combination of local treatments including surgery, radiotherapy and systemic therapeutics, 5% to more than 11% of patients present with metastatic disease, and a significant fraction of early breast cancer patients have a micro-metastatic disease resistant to systemic treatment and will ultimately experience a distant relapse, which is still considered an incurable disease. The exact cause of breast cancer is unknown but always involves damage to a cell’s DNA. Breast cancer tumor cells can be categorized according to certain proteins expressed on the cell surface, which determine whether or not they are likely to respond to targeted therapies designed to target the cell surface proteins. These biomarkers include estrogen receptors (ER), progesterone receptors (PR) collectively classified as hormonal receptors (HR) and human epidermal growth factor receptor 2 (HER2). Cells with low levels of ER, PR or HER2 are called ER-negative (ER-), PR-negative (PR-), HR-negative (if both ER- and PR-) or HER2-negative (HER2-) and are less likely to benefit from targeted drugs that address the specific cell surface proteins. Over 80% of newly diagnosed breast cancer cases fall within the following two HER2-negative categories:

1) Luminal-A (HER2- / HR+) breast cancer: ~70% of patients 2) Triple Negative Breast Cancer (HER2- / HR-): ~12% of patients)

Luminal-A is the most common type of breast cancer and has relatively good prognosis. Triple Negative Breast Cancer (TNBC), which is more common among younger women and African American women, has a poor prognosis. Although the improvement in the screening and treatment of breast cancer has resulted in steady increase of five-year relative survival rate over the last 20 years, there remains significant unmet medical need in TNBC and HR+ refractory patients who do not respond or progress on standard of care treatment. Aim to improve outcomes in combination with chemo and cancer immunotherapy Balixafortide is a potent and selective CXCR4 antagonist that is being developed to improve therapeutic outcomes in cancer, in combination with chemotherapy and cancer immunotherapy. CXCR4 is a chemokine receptor crucial in tumor progression and has been expressed in various types of cancers including breast cancer. Overexpression of CXCR4

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promotes tumor growth through increased signalling pathways, angiogenesis (new blood vessel formation), metastastis and immune cell modulation. CXCR4-positive tumors often grow faster than CXCR4-negative tumors, while lymph mode metastasis and distant organ metastasis frequently occur in CXCR4-positive tumor cases. After failure of chemotherapy, there is no established standard of care for HER2-negative patients with metastatic breast cancer. There has been a significant amount of development activity, with a number of different classes of new potential drugs being approved and launched for HER2-negative breast cancer. It is expected that combination strategies including new drugs in development will be incorporated in the future standards of care. Given balixafortide’s mechanism of action, most of these approaches should provide an opportunity for combination therapies with balixafortide in breast cancer and in other indications. Ahead of the pack of CXCR4 antagonists in solid tumors and breast cancer In March 2018, Polyphor announced positive results of its open label phase Ib/proof-of-concept (POC) trial of balixafortide in combination with chemotherapy eribulin (branded Halaven by Eisai) in patients with advanced metastatic HER2-negative breast cancer. The company was the first to demonstrate POC of a CXCR4 antagonist in a solid tumor such as breast cancer and currently leads the CXCR4 antagonist competition with balixafortide now in pivotal phase III development with results due in 2021. Sanofi’s Mozobil (plerixafor – USD 222 mn sales in 2019) is the only drug within the CXCR4 antagonist class that has been approved. In 2008 (US) and 2009 (EU), Mozobil was approved for stem cell mobilization in the bone marrow transplantation setting, which is a niche indication Polyphor will not pursue. There are an estimated 10 other CXCR4 antagonists in phase I/II development for various solid tumors and blood disorders. Balixafortide remains the only CXCR4 antagonist in development for breast cancer and the most advanced CXCR4 antagonist in development for solid tumors. Major differentiation with other CXCR4 antagonists in clinical development, include:

• Safety profile enables higher dosing in patients compared to other CXCR4 antagonists

• Dosing regimen is optimized • Numerous preclinical studies performed in breast cancer models support its efficacy • Higher in vitro potency and better selectivity compared to Mozobil (approved -

hematopoietic stem cell (HSC) mobilization). • Optimized for improved tolerability compared to BioLineRx’s motixafortide (phase III

– HSC mobilization; phase II – pancreatic cancer, acute myeloid lymphoma) and X4 Pharma’s mavorixafor (phase III - WHIM syndrome; phase II - kidney cancer)

Substantial clinical data supports use in breast cancer and solid tumors Balixafortide has been investigated in six clinical trials with a total of 330 subjects either as a single agent or in combination with other drugs. Five clinical studies have been completed. 235 subjects received at least one dose of balixafortide. Overall data generated to date support an acceptable safety and tolerability profile. Importantly, the main phase Ib/proof-of-concept (POC) trial in breast cancer met its primary endpoints. Based on the promising data observed in the POC trial, a so-called “end of phase I” meeting was held with the FDA in March 2018. A development path was identified for the potential approval in the US of the combination of balixafortide and eribulin for the treatment of patients with HER2-negative metastatic breast cancer who have previously received at least two chemotherapeutic regimens in the metastatic setting by conducting a single pivotal study dubbed “FORTRESS”, in 384 patients. This pivotal trial started in June 2019 with topline results to

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report in 2021. In case interim results of the trial would allow it, an application for accelerated approval could potentially be filed. In April 2018, the FDA granted fast-track designation for balixafortide in combination with eribulin in metastatic breast cancer. Fast track is a process designed to facilitate the development, and expedite the review of drugs to treat serious conditions and fill an unmet medical need. PHASE I – Results point to a new treatment option in heavily pre-treated HER2- mBC In 2014, Polyphor started an international, single-arm, open-label, non-randomized, dose escalation phase Ib/proof-of-concept (POC) trial at 11 sites in Spain and the US with an expanded dose cohort to assess the anti-tumor activity, safety and pharmacokinetics of balixafortide in combination with eribulin in patients with HER-negative metastatic breast cancer. HER2-negative adult females were enrolled with histologically confirmed invasive metastatic breast cancer, evidence of tumor cell CXCR4 expression and at least one measurable metastatic tumor. The patients had previously received up to three chemotherapy regimens for metastatic breast cancer. Patients with HR+ status must have failed at least one endocrine therapy or be considered unsuitable for endocrine therapy. The primary endpoints were dose-limiting toxicities and adverse events, the establishment of a maximum tolerated dose (MTD) or phase II dose, and pharmacokinetic parameters. Analysis of antitumor activity was done in all patients who received at least one full treatment cycle. The efficacy parameters included: overall response rate (ORR), clinical benefit rate (CBR) and overall survival (OS). At data cut-off in July 2017, 56 patients enrolled in the study had received at least one dose of balixafortide of which 4 were still responding. 11 cohorts of 3 patients were treated with balixafortide at doses ranging from 0,5 mg/kg to 5.5 mg/kg in combination with eribulin at a dose of either 1.1 mg/m2 (cohorts 2 and 3) or 1.4 mg/m2 (cohorts 1 and 4 to 11).

Together with cohort 11, 22 additional patients were treated at the recommended phase II dose of 5.5 mg/kg in combination with eribulin at a dose of 1.4 mg/m2; as one patient was withdrawn from the study the results for this dose expansion cohort are based on 24 patients. Treatment for these patients was based on a 21-day cycle (which is the standard eribulin treatment cycle). During each cycle, eribulin was given at day 2 and 9, whereas balixafortide was administered on days 1, 2 and 3 and on days 8, 9 and 10 (i.e. on six days per treatment cycle). All patients received treatment until disease progression or unacceptable toxicity.

13%

47%

63%

0%

20%

40%

60%

80%CLINICAL BENEFIT RATE

13%

33%38%

0%

10%

20%

30%

40%

OVERALL RESPONSE RATE

3.3 3

6.2

0

5

10PROGRESSION-FREE

SURVIVAL

9.411.2

18

0

5

10

15

20OVERALL SURVIVAL

IMPACT OF HIGH DOSE RESPONSE ACROSS ALL EFFICACY ENDPOINTS IN BALIXAFORTIDE PHASE IB POC TRIAL

LOW DOSE (N=15)0.5-2.0 MG/KG

MEDIUM DOSE (N=15)2,5 – 4,5 MG/KG

HIGH DOSE (N=24)5,5 MG/KG


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For the expanded dose cohort an objective response was observed in 9 out of the 24 patients (ORR: 38%) and a clinical benefit in 15 patients (CBR: 63%). For all 54 patients in the pre-defined efficacy group (at least one full cycle of treatment) ORR was 30% and CBR 44%. These results compare to an ORR of 13% and a CBR of 28% reported for eribulin monotherapy in its US “EMBRACE” registration trial. In the expanded dose cohort, the median PFS based on the Kaplan Meier analysis was 6.2 months (3.7 months for eribulin in “EMBRACE”) and the one-year survival rate was 75% (53.9% for eribulin in “EMBRACE”).

At the American Society of Clinical Oncology (ASCO) meeting in June 2019, Polyphor presented the overall survival for the expanded cohort at 18 months of 50% and at 24 months of 33.3%, whereas the overall survival for the overall efficacy population was 42.4% at 18 months and 25% at 24 months. These data are consistent with the positive trend of all efficacy read-outs observed in the POC trial and safety information was consistent with what was previously reported. Although inter-trial comparisons should be interpreted with caution, these survival rates, especially for the expanded cohort, are higher than those reported for eribulin monotherapy in similar metastatic breast cancer populations.

13

38

0

10

20

30

40

50

60

70

INDIRECT EFFICACY COMPARISON – “EMBRACE” ERIBULIN REGISTRATION TRIAL VS. BALIXAFORTIDE POC TRIAL

ERIBULIN(“EMBRACE”)

BALIXAFORTIDE + ERIBULIN (POC)

OVERALL RESPONSE RATE

%

PROGRESSION FREE SURVIVAL

3.6

6.2

0

2

4

6

8

MED

IAN

, MO

NTH

S

28

63

0

10

20

30

40

50

60

70

CLINICAL BENEFIT RATE

%

13.1

18

0

2

4

6

8

10

12

14

16

18

20

OVERALL SURVIVAL

MED

IAN

, MO

NTH

S








PROGRESSION FREE SURVIVALHIGH DOSE PATIENTS

OVERALL SURVIVALHIGH DOSE PATIENTS

ERIBULN (“EMBRACE”)TPC (“EMBRACE”)BALIXAFORTIDE + ERIBULIN OVERALL (PHASE 1B POC)BALIXAFORTIDE + ERIBULIN CONFIDENCE INTERVAL (PHASE 1B POC)

INDIRECT EFFICACY COMPARISON – “EMBRACE” ERIBULIN REGISTRATION TRIAL VS. BALIXAFORTIDE POC TRIAL


15 September 2020


Side effects manageable - no additional safety burden due to balixafortide The safety and tolerability of balixafortide together with eribulin appeared comparable to published data on either eribulin or balixafortide monotherapy. No dose-limiting toxicities were confirmed and the maximum tolerated dose (MTD) was not reached. The highest dose was established as eribulin 1.4 mg/m2 on days 2 and 9, and balixafortide 5.5 mg/kg on days 1-3 and 8-10 of the 21-day treatment cycle (now used in pivotal “FORTRESS” trial). The most common treatment-emergent adverse effects of any grade were fatigue (44 of 56 or 79% of patients), neutropenia (57%), infusion-related reactions (48%), alopecia (46%), constipation (46%) and nausea (45%). Serious adverse events (SAEs) occurred in 38% of the 56 patients and generally were single occurrences with the exception of febrile neutropenia (9%), urinary tract infections (5%), neutrophil count decrease (4%), constipation (4%) and pneumonia (4%). Two (4%) patients died while receiving treatment; one from septic shock and one from pneumonia. Both patients had comorbidities and had received several lines of cytotoxic chemotherapy and radiotherapy prior to trial entry. Two other patients discontinued treatment due to fatigue and peripheral neuropathy. All SAEs reported were related to either eribulin alone or the combination of balixafortide and eribulin; no SAEs were related to balixafortide alone. In the expanded dose cohort (including the patients that was withdrawn from the trial) the most common adverse effects was asthenia/fatigue (22 of 25 patients or 88%) and the most frequent adverse events with a grading of ‘‘3’’ or higher was neutropenia (11 of 56 patients or 19.6%). Linear dose-exposure to balixafortide was observed and no dose limiting toxicities were observed in any dose cohorts. Although numbers were small, there appeared to be no overlapping toxicities or accentuation of known eribulin toxicities with balixafortide. PHASE III – “FORTRESS” on track to report in 2021 despite Covid-19 pandemic In June 2019, Polyphor started the single, pivotal phase III “FORTRESS” trial evaluating balixafortide in combination with chemotherapy eribulin for the treatment of patients with HER2-negative, locally recurrent or metastatic breast cancer (mBC) to confirm the promising results seen in the POC trial. The “FORTRESS” trial will enroll a total of 384 patients with HER2-negative mBC, of which 320 patients receiving third or subsequent treatment line and 64 patients receiving second line chemotherapy. Co-primary endpoints include: 1) overall response rate (ORR) and 2) progression-free survival (PFS). Subject to the data, Polyphor will have the possibility to submit a filing for US accelerated approval approximately six months after the recruitment is completed on the basis of the analysis of the ORR, confirmed by an independent blinded review, and of the associated durability of response. The full approval would be based on the magnitude of PFS on blinded independent review, supported by an overall survival trend favoring the balixafortide arm with a favorable risk-benefit profile.

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Positively, the independent Data Safety and Monitoring Board (DSMB) has completed two pre-specified interim analyses, one in March 2020 (193 randomized patients) and one in July 2020 (284 randomized patients) of safety outcomes and indicated “FORTRESS” should continue without modifications. Despite the Covid-19 pandemic, 366 (95% of total) patients have been randomized at the end of August 2020 with the trial on track to report topline results in 2021. Balixafortide development strategy to maximize value and set priorities Polyphor established a comprehensive development strategy for balixafortide to maximize the value of the compound beyond the initial indication to earlier treatment lines and other tumors and drug combinations and to set clear development priorities in the near and midterm, which include:

• The completion of the dossier for the New Drug Application (NDA) submission including the clinical pharmacology package, CMC package and non-clinical safety and pharmacology package

• Breakthrough therapy designation and PRIME designation in the US and EU, respectively, will be considered depending on the strength of the topline results

• Advance the development strategy beyond “FORTRESS” such as investigating improved dosing and scheduling, define the maximum tolerated dose (MTD), assess tolerance and preliminary efficacy in combination with other chemotherapies in mBC, develop other formulations than IV, and develop a CXCR4 diagnostic test

And for the long-term in expanding the cancer opportunity, which include:

• Targeting tumors beyond mBC as CXCR4 expression has been validated as a negative prognostic factor to other tumor types

• Combinations with other immune-oncology therapies could provide further opportunities for balixafortide

• Novel immune-oncology targets identified to be addressed by peptides from the macrocycle technology platform

• Identify new lead immune-oncology compounds to be nominated as development candidates post the “FORTRESS” ORR results due in H1 2021

OVERALL POPULATION N=384; 320 3RD LINE + AND 64 2ND LINE

PFS* + INTERIM OS DATA CUT

OS* FINAL ANALYSIS

ORR* DATA CUT

*ALPHA ALLOCATION AND RECYCLING IS USED TO ENSURE CONTROL OF THE OVERALL TYPE I ERROR RATE FOR THESE FORMAL ANALYSES

15 MONTHS RECRUITMENT

6 MONTHS FROM LAST PATIENT ENROLLED



END OF TRIAL

ACCELERATED APPROVAL OPTION

LABEL EXTENSION

NDA FILING

90% POWER FOR DETECTING SUPERIORITY OF BALIXAFORTIDE + ERIBULINVERSUS ERIBULIN MONOTHERAPY FOR THE PRIMARY EFFICACY ENDPOINT OFPFS IN BOTH THE 3rd LINE + AND OVERALL POPULATION

JUN 2019 -SEP 2020

EARLY 2021

END 2021

END 2022

“FORTRESS” PHASE III TRIAL TIMELINE FLOW CHART


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CHF 700+ mn peak sales in mBC with first launches in 2023 We have based our detailed bottom up forecasts for balixafortide largely on detailed data available in the US and extrapolated the data where possible to other regions, where detailed data is often lacking or not publicly available. We have based our estimates on sources such as the American Cancer Society, National Cancer Institute, the WHO and the SEER Cancer Statistics Review. To account for regional differences, we provide detailed forecasts for the US, Europe (EU 27), China (urban population) and Japan. Furthermore, we account for the use of balixafortide in Luminal-A (HER2-/HR+) and triple negative (HER2-/HR-) breast cancer patients. We forecast until expiry of the balixafortide/eribulin combination patent in 2038 (10-year forecasts on page 26 are provided due to space considerations). Detailed US bottom up forecasts point to CHF 250+ mn peak sales in breast cancer It is estimated that in the US there will be 275,928 newly diagnosed breast cancer patients in 2020, with largely flat future growth. Approximately 70% will be diagnosed with Luminal-A breast cancer, while approximately 10% will have triple negative breast cancer (TNBC). Next to newly diagnosed breast cancer patients, previously diagnosed breast cancer patients will also be treated. These are estimated to amount to 2.6x (Luminal-A) and 2.5x (TNBC) of newly diagnosed breast cancer patients. Approximately 4% of Luminal-A breast cancer is metastatic while roughly 6% of TNBC have metastatic disease. The number of patients progressing from Stage I-III is ~16% for Luminal-A and ~23% for TNBC. Roughly 36% of Luminal-A breast cancer patients are not eligible for hormonal (endocrine) treatment such as tamoxifen or aromatase inhibitors and will start with chemotherapy such as eribulin. As a result, we calculate the total of eligible patients with metastatic Luminal-A breast cancer to amount to approximately 139,000 in 2020. For TNBC this amounts to ~29,000 eligible metastatic patients. Balixafortide will initially be given 2nd line patients and later treatment lines in combination with eribulin. We apply the following assumptions for the separate treatment lines in Luminal-A breast cancer: 2nd line (~21% Luminal-A patients of which ~2% on eribulin), 3rd line (~20% Luminal-A patients of which ~11% on eribulin), 4th line (~14% Luminal-A patients of which ~6% on eribulin) and 5th line (~13% Luminal-A patients of which ~11% on eribulin). For TNBC we apply the following assumptions: 2nd line (~21% TNBC patients of which ~4% on eribulin), 3rd line (~25% TNBC patients of which ~5% on eribulin), 4th line (~17% TNBC patients of which ~7% on eribulin) and 5th line (~10% TNBC patients of which ~7% on eribulin). For simplicity we assume 8 treatment cycles per patient for each treatment line in Luminal-A and TNBC patients with a treatment cost per cycle of USD 10,000 and patient compliance of 90%. We assume balixafortide to be launched for breast cancer in the US in 2023. We assume a rapid market penetration, conservatively peaking at 50% of eribulin-treated patients in 2nd to 5th treatment lines in both Luminal-A and TNBC patients. Based on the above, we expect US peak sales to amount USD 283 mn in 2036 of which USD 241 mn (~85%) from Luminal-A breast cancer and the remainder from TNBC.

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Outside the US balixafortide peak sales are expected to amount CHF 450+ mn Balixafortide is expected to generate significant sales outside the US. We forecast peak sales of CHF 454 mn in Europe, urban China and Japan. In Europe, there were an estimated 573,750 newly diagnosed breast cancer patients in 2019, which is expected to grow by roughly 2% annually. Assuming first launches in 2023, a treatment cost per cycle of EUR 4,000, a conservative peak market penetration of 40% of eribulin-treated patients in 2nd to 5th treatment lines and applying the same patient and treatment dynamics as in the US, we calculate peak sales in Europe to amount to CHF 295 mn. For urban China, where Fosun Pharma acquired the exclusive development and commercialization rights in August 2020, we calculate balixafortide peak sales to amount to CHF 127 mn based on 991,243 newly diagnosed breast cancer patients growing at 4% annually, launch in 2025, a treatment cost per cycle of USD 2,500 and similar peak market penetration of 40% as in Europe. In Japan, with considerably fewer newly diagnosed breast cancer patients of 95,716 patients with basically flat growth, launch in 2025, a treatment cost of USD 4,000 per cycle and a similar peak market penetration of 40% as in Europe and China, peak sales for balixafortide are expected to reach CHF 31 mn. Substantial milestone payments and sales royalties expected from partners Upon positive “FORTRESS” ORR results in Q2 2021 and PFS results in Q4 2021, we expect Polyphor to seek a global development and commercialization agreement for the rights of balixafortide (excluding China) with a major cancer player. Next to commercializing balixafortide in metastatic breast cancer, it will be important to have a global cancer player to expand use of balixafortide in breast cancer and in other drug combinations, as well as expand use to other indications which have CXCR4 overexpression. This could lead to a considerable upside to our balixafortide forecasts, which are currently contained to metastatic breast cancer in combination with eribulin. In China, we account for the recently announced exclusive license agreement with Fosun Pharma. Polyphor is eligible to receive USD 19 mn regulatory milestones and up to USD 148 mn commercialization milestones (we conservatively assume USD 52 mn for metastatic breast cancer alone) and tiered royalties starting from low double digits increasing to mid-teens (we assume royalties starting at 12% of sales gradually increasing to 16%). In our view, these are excellent terms considering topline results of “FORTRESS” are only due in 2021. Outside China, we assume upfront, regulatory and commercial milestones to amount to CHF 282 mn and royalties on net sales of 17.5%. We believe this fairly reflects a positive phase III cancer drug with peak sales of CHF 600+ mn (excluding China) in its first major indication, however, needs further development and significant investment in other indications. We assume an additional CHF 57 mn in upfront milestone payments from the partner in 2022, which provide a substantial amount of cash needed to further develop Polyphor’s emerging OMPTA antibiotics pipeline and seek new macrocyclic compounds for oncology. Once approved, Polyphor will seek earlier treatment lines and other drug combinations for balixafortide in metastatic breast cancer, with the potential to expand the sales potential in breast cancer. We have conservatively not accounted for this additional sales potential.

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Forecasts & Sensitivity Analysis

BALIXAFORTIDE - FINANCIAL FORECASTS FOR METASTATIC BREAST CANCERINDICATION TREATMENT OF PROGRESSED METASTATIC BREAST CANCER IN COMBINATION WITH HALAVEN (ERIBULIN) - POTENTIAL FOR ADDITIONAL TREATMENT COMBINATIONSDOSAGE BALIXAFORTIDE 5.5 MG/KG INTRAVENOUSLY ON DAYS 1-3 AND 8-10 ON 21 DAY CYLCE IN COMBINATION WITH HALAVEN (ERIBULIN) - 8 TREATMENT CYCLESPRICE ASSUMED TREATMENT COST PER PATIENT PER CYCLE: US: USD 10,000/CYCLE; EU: EUR 4,000/CYCLE; CHINA: USD 2,500/CYCLE; JAPAN: USD 4,000/CYCLESTANDARD OF CARE METASTATIC LUMINAL-A BC: CHEMO OR TARGETED THERAPY; METASTATIC TNRB: CHEMOTHERAPY AND INCREASINGLY TARGETED THERAPY AND CHECKPOINT INHBITORS UNIQUE SELLING POINT IMPROVES OUTCOMES OF METASTATIC BREAST CANCER PATIENTS TREATED WITH HALAVEN (ERIBULIN) WHILE NOT ADDING TO THE SAFETY/TOLERABILITY BURDEN

7Ps ANALYSISPATENT PATENT EXPIRY (WO2008/104090): USA: 2033 (PTA); EU: 2032 (SPC); 10 PATENT FAMILIES RELATED TO CXCR4 ANTAG.; BALIXAFORTIDE/ERIBULIN COMBINATION PATENT EXPIRY: 2038PHASE SINGLE PIVOTAL PHASE III "FORTRESS" TRIAL IN 384 PATIENTS WITH METASTATIC HER2 NEGATIVE BREAST CANCER , CO-PRIMARY ENDPOINTS: ORR (Q2 2021) & PFS (Q4 2021)PATHWAY US: FAST-TRACK DESIGNATION GRANTED, POTENTIAL FOR BREAKTHROUGH THERAPY DESIGNATION; EU: ACCELERATED ASSESSMENTPATIENT INCREASED EFFICACY ON TOP OF HALAVEN THERAPY WITHOUT ADDITIONAL SIDE EFFECTSPHYSICIAN NEW COMBINATION THERAPY FOR HEAVILY PRETREATED LUMINAL-A OR TNBC PATIENTS THAT PROLONGS TREATMENT RESPONSE WITHOUT ADDING TO THE SAFETY BURDENPAYER INCREASED EFFICACY ON TOP OF HALAVEN THERAPY WITHOUT ADDITIONAL SIDE EFFECTS LOWERING OVERALL TREATMENT COSTPARTNER FOSUN PHARMA EXCLUSIVE PARTNER CHINA (USD 182 MN MILESTONES, 12-14% TIERED ROYALTIES); US/EU: PARTNER AFTER "FORTRESS" TRIAL RESULTS; ORR (Q2 2021) & PFS (Q4 2021)

REVENUE MODELUNITED STATES - SALES BOOKED BY PARTNER 2019E 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029ENEWLY DIAGNOSED BREAST CANCER PATIENTS 275,928 276,480 277,033 277,587 278,142 278,698 279,256 279,814 280,374 280,935 281,4971) LUMINAL-A (HER2-/HR+) BREAST CANCER - NEWLY DIAGNOSED LUMINAL-A PATIENTS (~70% BC PATIENTS) 193,150 193,536 193,923 194,311 194,700 195,089 195,479 195,870 196,262 196,654 197,048 - PREVIOUSLY DIAGNOSED LUMINAL-A (~2.6X NEWLY DIAGNOSED) 502,189 503,194 504,200 505,208 506,219 507,231 508,246 509,262 510,281 511,301 512,324TOTAL LUMINAL-A (HER2-/HR+) BC PATIENTS 695,339 696,730 698,123 699,519 700,918 702,320 703,725 705,132 706,543 707,956 709,372 - METASTATIC LUMINAL-A PATIENTS (~4% LUMINAL-A) 27,814 27,869 27,925 27,981 28,037 28,093 28,149 28,205 28,262 28,318 28,375 - LUMINAL-A PATIENTS PROGRESSING FROM STAGE I-III (~16% LUMINAL-A) 111,254 111,477 111,700 111,923 112,147 112,371 112,596 112,821 113,047 113,273 113,499TOTAL ADVANCED LUMINAL-A (HER2-/HR+) BC PATIENTS 139,068 139,346 139,625 139,904 140,184 140,464 140,745 141,026 141,309 141,591 141,874 - 2L LUMINAL-A PATIENTS (~21% LUMINAL-A PATIENTS) 29,378 29,436 29,495 29,554 29,613 29,673 29,732 29,791 29,851 29,911 29,971 - 2L LUMINAL-A PATIENTS ON ERIBULIN (~2%) 706 707 708 710 711 713 714 716 717 718 720 - 3L LUMINAL-A PATIENTS (~20% LUMINAL-A PATIENTS) 27,631 27,686 27,741 27,797 27,852 27,908 27,964 28,020 28,076 28,132 28,188 - 3L LUMINAL-A PATIENTS ON ERIBULIN (~11%) 3,164 3,171 3,177 3,183 3,190 3,196 3,202 3,209 3,215 3,222 3,228 - 4L LUMINAL-A PATIENTS (~14% LUMINAL-A PATIENTS) 19,322 19,360 19,399 19,438 19,477 19,516 19,555 19,594 19,633 19,672 19,712 - 4L LUMINAL-A PATIENTS ON ERIBULIN (~6%) 1,093 1,095 1,098 1,100 1,102 1,104 1,106 1,109 1,111 1,113 1,115 - 5L LUMINAL-A PATIENTS (~13% LUMINAL-A PATIENTS) 18,293 18,329 18,366 18,403 18,439 18,476 18,513 18,550 18,587 18,625 18,662 - 5L LUMINAL-A PATIENTS ON ERIBULIN (~11%) 2,012 2,016 2,020 2,025 2,029 2,033 2,037 2,041 2,045 2,049 2,053TOTAL ADVANCED LUMINAL-A PATIENTS ON ERIBULIN (2L - 5L) 6,975 6,989 7,003 7,017 7,031 7,046 7,060 7,074 7,088 7,102 7,116PENETRATION (%) 0% 0% 0% 0% 3% 11% 25% 39% 47% 50% 50%ADVANCED LUMINAL-A PATIENTS ON BALIXAFORTIDE 0 0 0 0 218 779 1,765 2,755 3,324 3,551 3,558TREATMENT CYCLES PER PATIENT 8 8 8 8 8 8 8 8 8 8 8TREATMENT COST PER CYCLE (CHF) 9,600 9,277 9,277 9,277 9,277 9,277 9,277 9,277 9,277 9,277 9,277PATIENT COMPLIANCE (%) 90% 90% 90% 90% 90% 90% 90% 90% 90% 90% 90%TREATMENT COST (CHF) 69,120 66,792 66,792 66,792 66,792 66,792 66,792 66,792 66,792 66,792 66,792SALES LUMINAL-A BALIXAFORTIDE (CHF MN) 0 0 0 0 15 52 118 184 222 237 2382) TRIPLE NEGATIVE (HER2-/HR-) BREAST CANCER (TNBC) - NEWLY DIAGNOSED TNBC PATIENTS (~10% BC PATIENTS) 28,531 28,588 28,645 28,702 28,760 28,817 28,875 28,933 28,991 29,049 29,107 - PREVIOUSLY DIAGNOSED TNBC (~2.5X NEWLY DIAGNOSED) 71,613 71,756 71,899 72,043 72,187 72,332 72,476 72,621 72,767 72,912 73,058TOTAL TNBC (HER2-/HR-) PATIENTS 100,144 100,344 100,545 100,746 100,947 101,149 101,351 101,554 101,757 101,961 102,165 - METASTATIC TNBC PATIENTS (~6% TNBC PATIENTS) 6,009 6,021 6,033 6,045 6,057 6,069 6,081 6,093 6,105 6,118 6,130 - TNBC PATIENTS PROGRESSING FROM STAGE I-III (23% TNBC PATIENTS) 23,033 23,079 23,125 23,172 23,218 23,264 23,311 23,357 23,404 23,451 23,498TOTAL ADVANCED TNBC PATIENTS 29,042 29,100 29,158 29,216 29,275 29,333 29,392 29,451 29,510 29,569 29,628 - 2L TNBC PATIENTS (~21% TNBC PATIENTS) 6,179 6,192 6,204 6,216 6,229 6,241 6,254 6,266 6,279 6,291 6,304 - 2L TNBC PATIENTS ON ERIBULIN (~4%) 266 266 267 267 268 268 269 269 270 271 271 - 3L TNBC PATIENTS (~25% TNBC PATIENTS) 7,186 7,200 7,215 7,229 7,244 7,258 7,273 7,287 7,302 7,316 7,331 - 3L TNBC PATIENTS ON ERIBULIN (~5%) 354 355 355 356 357 357 358 359 360 360 361 - 4L TNBC PATIENTS (~17% TNBC PATIENTS) 4,924 4,934 4,944 4,954 4,964 4,974 4,984 4,994 5,004 5,014 5,024 - 4L TNBC PATIENTS ON ERIBULIN (~7%) 369 370 371 371 372 373 374 374 375 376 377 - 5L TNBC PATIENTS (~10% TNBC PATIENTS) 2,898 2,904 2,910 2,916 2,922 2,927 2,933 2,939 2,945 2,951 2,957 - 5L TNBC PATIENTS ON ERIBULIN (~7%) 216 217 217 218 218 218 219 219 220 220 221TOTAL ADVANCED TNBC PATIENTS ON ERIBULIN (2L - 5L) 1,205 1,207 1,210 1,212 1,215 1,217 1,219 1,222 1,224 1,227 1,229PENETRATION (%) 0% 0% 0% 0% 3% 11% 25% 39% 47% 50% 50%ADVANCED TNBC PATIENTS ON BALIXAFORTIDE 0 0 0 0 38 134 305 476 574 613 615TREATMENT COST (8 TREATMENT CYCLES, 90% COMPLIANCE) (CHF) 69,120 66,792 66,792 66,792 66,792 66,792 66,792 66,792 66,792 66,792 66,792SALES TNBC BALIXAFORTIDE (CHF MN) 0 0 0 0 3 9 20 32 38 41 41SALES (CHF MN) 0 0 0 0 17 61 138 216 260 278 27917.5% ROYALTIES (CHF MN) 0 0 0 0 3 11 24 38 46 49 49UPFRONT & MILESTONE PAYMENTS (CHF MN) 0 0 0 23 19 5 9 0 19 0 0PROFIT BEFORE TAX (CHF MN) 0 0 0 23 22 15 33 38 64 49 49TAXES (CHF MN) 0 0 0 0 0 0 0 -2 -6 -7 -10PROFIT (CHF MN) 0 0 0 23 22 15 33 36 58 41 39TIMELINES ORR: Q1; PFS: Q4 F: H1; A: Q4 L: H1 ERIBULIN EXPIRY COM EXPIRY

EUROPE - SALES BOOKED BY PARTNER 2019E 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029ENEWLY DIAGNOSED BREAST CANCER PATIENTS 573,750 585,225 596,930 608,868 621,045 633,466 646,136 659,058 672,240 685,684 699,3981) LUMINAL-A (HER2-/HR+) BREAST CANCERTOTAL ADVANCED LUMINAL-A (HER2-/HR+) PATIENTS 289,170 294,953 300,852 306,870 313,007 319,267 325,652 332,165 338,809 345,585 352,497TOTAL LUMINAL-A PATIENTS ON ERIBULIN (2L - 5L) 14,504 14,795 15,090 15,392 15,700 16,014 16,334 16,661 16,994 17,334 17,681PENETRATION (%) 0% 0% 0% 0% 2% 9% 20% 31% 38% 40% 40%ADVANCED LUMINAL-A PATIENTS ON BALIXAFORTIDE 0 0 0 0 389 1,416 3,267 5,192 6,376 6,934 7,072TREATMENT COST (8 TREATMENT CYCLES, 90% COMPLIANCE) (CHF) 31,392 30,966 30,966 30,966 30,966 30,966 30,966 30,966 30,966 30,966 30,966SALES LUMINAL-A BALIXAFORTIDE (CHF MN) 0 0 0 0 12 44 101 161 197 215 2192) TRIPLE NEGATIVE (HER2-/HR-) BREAST CANCER (TNBC)TOTAL ADVANCED TNBC PATIENTS 60,388 61,595 62,827 64,084 65,366 66,673 68,006 69,366 70,754 72,169 73,612TOTAL TNBC PATIENTS ON ERIBULIN (2L - 5L) 2,505 2,556 2,607 2,659 2,712 2,766 2,822 2,878 2,936 2,994 3,054PENETRATION (%) 0% 0% 0% 0% 2% 9% 20% 31% 38% 40% 40%ADVANCED TNBC PATIENTS ON BALIXAFORTIDE 0 0 0 0 67 245 564 897 1,101 1,198 1,222TREATMENT COST (8 TREATMENT CYCLES, 90% COMPLIANCE) (CHF) 31,392 30,966 30,966 30,966 30,966 30,966 30,966 30,966 30,966 30,966 30,966SALES TNBC BALIXAFORTIDE (CHF MN) 0 0 0 0 2 8 17 28 34 37 38SALES (CHF MN) 0 0 0 0 14 51 119 189 232 252 25717.5% ROYALTIES (CHF MN) 0 0 0 0 2 9 21 33 41 44 45UPFRONT & MILESTONE PAYMENTS (CHF MN) 25 20 5 10 20R&D COSTS (CHF MN) -40 -44 -35 -18PROFIT BEFORE TAX (CHF MN) -40 -44 -35 8 22 14 31 33 61 44 45TAXES (CHF MN) 0 0 0 0 0 0 0 -2 -6 -7 -9PROFIT (CHF MN) -40 -44 -35 8 22 14 31 31 54 37 36

CHINA - SALES BOOKED BY FOSUN PHARMA 2019E 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029ENEWLY DIAGNOSED BREAST CANCER PATIENTS 991,243 1,030,892 1,072,128 1,115,013 1,159,614 1,205,998 1,254,238 1,304,408 1,356,584 1,410,847 1,467,281SALES (CHF MN) 0 0 0 0 0 0 5 19 45 73 9112% TO 16% ROYALTIES (CHF MN) 0 0 0 0 0 0 1 2 5 9 11UPFRONT & MILESTONE PAYMENTS (CHF MN) 0 14 0 2 8 8 28 0 0 0 0PROFIT BEFORE TAX (CHF MN) 0 14 0 2 8 8 28 2 5 9 11TAXES (CHF MN) 0 0 0 0 0 0 0 0 -1 -1 -2PROFIT (CHF MN) 0 14 0 2 8 8 28 2 5 7 9

JAPAN - SALES BOOKED BY PARTNER 2019E 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029ENEWLY DIAGNOSED BREAST CANCER PATIENTS 95,716 95,907 96,099 96,291 96,484 96,677 96,870 97,064 97,258 97,453 97,648SALES (CHF MN) 0 0 0 0 0 0 2 7 15 24 2917.5% ROYALTIES (CHF MN) 0 0 0 0 0 0 0 1 3 4 5UPFRONT & MILESTONE PAYMENTS (CHF MN) 0 0 0 9 0 0 9 0 0 0 2PROFIT BEFORE TAX (CHF MN) 0 0 0 9 0 0 10 1 3 4 7TAXES (CHF MN) 0 0 0 0 0 0 0 0 0 -1 -1PROFIT (CHF MN) 0 0 0 9 0 0 10 1 2 4 6

2019E 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029EGLOBAL SALES (CHF MN) 0 0 0 0 31 112 264 430 552 627 655GLOBAL PROFIT (CHF MN) -40 -30 -35 42 52 37 102 71 119 90 89WACC (%) 7.0%NPV TOTAL PROFIT (CHF MN) 670NUMBER OF SHARES (MN) 13.7NPV PER SHARE (CHF) 48.8SUCCESS PROBABILITY 50% = SINGLE PIVOTAL PHASE III TRIAL

RISK ADJUSTED NPV PER SHARE (CHF) 24.4SENSITIVITY ANALYSIS

WACC (%)CHF/SHARE 5.5 6.0 6.5 7.0 7.5 8.0 8.5

100% 56.3 53.7 51.2 48.8 46.5 44.4 42.490% 50.7 48.3 46.0 43.9 41.9 40.0 38.280% 45.1 42.9 40.9 39.0 37.2 35.5 33.9

SUCCESS PROBABILITY 70% 39.4 37.6 35.8 34.1 32.6 31.1 29.760% 33.8 32.2 30.7 29.3 27.9 26.6 25.450% 28.2 26.8 25.6 24.4 23.3 22.2 21.240% 22.5 21.5 20.5 19.5 18.6 17.8 17.030% 16.9 16.1 15.3 14.6 14.0 13.3 12.720% 11.3 10.7 10.2 9.8 9.3 8.9 8.5


15 September 2020


Unique Selling Point First-in-class CXCR4 antagonist for heavily pre-treated metastatic breast cancer patients in combination with chemotherapy eribulin (branded Halaven by Eisai), which increases efficacy without increasing the safety and tolerability burden. Potential for earlier treatment lines, other drug combinations as well as other indications. 7P's Analysis Patent: 10 patent families are related to CXCR4 antagonists. The composition of matter patent (WO2008/104090) expires in 2027 (EU) and 2028 (US) with potential extensions. We assume patent protection until 2038 when the balixafortide/eribulin combination patent expires. Phase: The single pivotal phase III “FORTRESS” trial of balixafortide in combination with eribulin in 384 heavily pretreated metastatic HER2 negative breast cancer patients is close to full enrolment with the two co-primary endpoints, ORR (overall response rate) and PFS (progression-free survival) to report in Q2 2021 and Q4 2021, respectively, representing major value inflection points. Pathway: Balixafortide received FDA “fast track designation” in April 2017 potentially speeding up the US review time to only 6 months. Potential for “breakthrough therapy designation” in the US and “PRIME (PRIority MEdicine) designation” in the EU with higher priority and faster review times to bring promising therapies to patients earlier. Patient: Improves treatment outcomes without or potentially reducing the safety and tolerability burden of treatment with eribulin chemotherapy. Physician: provides physicians with a truly new treatment modality – a first-in-class CXCR4 antagonist - for heavily pretreated metastatic HER2-negative breast cancer, which in combination with eribulin prolongs treatment effect while not adding to the safety and tolerability burden of eribulin. Potential for combination therapy with other cancer compounds. Payer: Increased efficacy on top of eribulin treatment without increasing or potentially lowering the safety and tolerability burden of eribulin leads to lower overall treatment costs. Partner: Polyphor plans to out license balixafortide development and commercialization rights (excluding China) on positive single phase III “FORTRESS” trial results to a major cancer player in return for substantial development, regulatory and commercial milestone payments and royalties on net sales. We assume milestone payments in metastatic breast cancer alone to amount to CHF 282 mn with sales royalties of 17.5% reflecting a phase III cancer program with blockbuster sales potential in breast cancer and other indications. In August 2020, Polyphor secured a development and commercialization partner for China with Fosun Pharma on excellent terms. Polyphor received a USD 15 mn upfront milestone (cutting the remaining funding need in half to reach profitability in 2022/2023) and is eligible for USD 19 mn development milestones and up to USD 148 mn commercialization milestones and tiered sales royalties starting from low double digits increasing to mid-teens. We conservatively assume USD 19 mn development milestones and USD 52 mn commercialization milestones for metastatic breast cancer and royalties on sales starting at 12% and gradually increasing to 16%.

15 September 2020


HER2-Negative Breast Cancer Market The HER2-negative breast cancer market in the US, EU5, Japan and urban China was valued at almost USD 8 bn in 2018 and is set to increase by a CAGR of 5.5% to approximately USD 13 bn in 2028 according to GlobalData. Growth will be driven by an increase in disease prevalence, label expansions of currently marketed products, increased uptake of recently launched products in particular in Europe and Asia, and upcoming launches of novel therapies. Growth of these factors should be sufficient to offset patent expiries of major brands including Pfizer’s Ibrance (palbociclib), Novartis’ Afinitor (everolimus), AstraZeneca’s Faslodex (fulvestrant), Lynparza (olaparib), and Eisai’s Halaven (eribulin), and increasing cost containment limiting the uptake of branded therapies in Europe and Asia, among others.

Breast cancer is the second most common cause of death in women in the United States after lung cancer. However, the number of women who have died of breast cancer has decreased by 40% from 1989 to 2007 thanks to early detection and treatment improvements. Breast cancer starts when healthy cells in the breast change and grow out of control forming a mass or sheet of cells called a tumor. The exact cause of breast cancer is unknown but always involves damage to a cell’s DNA. Risk factors include genetic factors (e.g. gender, age, race, family history and genetic factors) and environmental/lifestyle factors (e.g. lack of physical activity, overweight, poor diet, chest radiation, combined hormone replacement therapy). Most breast cancers start in the ducts or lobes and are called ductal or lobular carcinoma. Breast cancer can be non-invasive (not spreading beyond the milk ducts or lobules in the breast) or invasive (metastatic) that spreads into surrounding tissues.

HER2-NEGATIVE BREAST CANCER - KEY FACTSMARKET SIZE GLOBALLY USD ~8 BN IN 2018 EXPECTED TO GROW TO USD ~13 BN IN 2028PREVALENCE 2 MN NEW CASES GLOBALLY; ~275,000 NEW CASES IN THE US, ~580,000 IN THE EU 27INCIDENCE LIFE TIME RISK OF BREAST CANCER IS ~12% OR 1 IN 8 WOMEN IN THE US/WESTERN EUROPE;

~70% IS LUMINAL-A (HER2-/HR+) AND ~20% TRIPLE NEGATIVE BREAST CANCER (HER2-/HR-)

UNDERLYING CAUSE THE EXACT CAUSE OF BREAST CANCER IS UNKNOWN BUT ALWAYS INVOLVES DAMAGE TO A CELL'S DNA. RISK FACTORS INCLUDE GENETIC FACTORS (GENDER, AGE, RACE, FAMILY HISTORY AND GENETIC FACTORS, MENSTRUAL AND REPRODUCTIVE HISTORY, GENOME CHANGES, DENSE BREAST TISSUE) AND ENVIRONMENTAL/LIFESTYLE RISK FACTORS (LACK OF PHYSICAL ACTIVITY, POOR DIET, OVERWEIGHT, ALCOHOL, CHEST RADIATION, COMBINED HORMONE REPLACMENT THERAPY).SURVIVAL RATES VARY GREATLY WORLDWIDE RANGING FROM 80% (NORTH AMERICA, EUROPE, JAPAN), 60% IN MIDDLE-INCOME COUNTRIES TO 40% IN LOW-INCOME COUNTRIES BY THE LACK OF EARLY DETECTION PROGRAMS

SYMPTOMS - NEW LUMP IN BREAST OR UNDERARM (ARMPIT)- THICKENING OR SWELLING OF PART OF THE BREAST- IRRITATION OR DIMPLING OF BREAST SKIN- REDNESS, PAIN IN THE NIPPLE AREA, PULLING IN OF THE NIPPLE, NIPPLE DISCHARGE

DRUG CLASS (KEY BRANDS) - HORMONAL THERAPIES (TAMOXIFEN, AROMATASE INHIBITORS (E.G. ANASTROZOLE, EXEMESTANE, LETROZOLE), GOSERELIN , FULVESTRANT) - MOST GENERIC- CHEMOTHERAPY (E.G. ANTHRACYCLINES, TAXANES, ALKYLATORS) - MOST GENERIC - MTOR KINASE INHIBITOR (AFINITOR)- CDK4/6 INHIBITORS (VERZENIO, IBRANCE, KISQALI)- PARP INHIBITORS (LYNPARZA, TALZENNA) - CHECKPOINT INHIBITORS (KEYTRUDA, TECENTRIQ) - PI3K/AKT INHIBITORS (PIQRAY)

MAJOR PLAYERS (KEY BRANDS) - ROCHE (TECENTRIQ) - MERCK & CO (KEYTRUDA, LYNPARZA)- NOVARTIS (KISQALI, PIQRAY, AFINITOR)- EISAI (HALAVEN)- CELGENE (ABRAXANE)- PFIZER (IBRANCE, TALZENNA)- ASTRAZENECA (LYNPARZA, FASLODEX)- ELI LILLY (VERZENIO)

SOURCE: VALUATIONLAB, NIH, CDC, WHO, BREASTCANCER.ORG, GLOBALDATA

15 September 2020


Breast cancer can be divided in 3 main subtypes:

1) Hormone receptor positive (HR+): 60-75% of breast cancers express estrogen (ER) and/or progesterone (PR) receptors; only one of these receptors have to be positive for HR+; cancers without these receptors are called hormone receptor negative (HR-)

2) HER2 positive (HER2+): 10-20% of breast cancers depend on the gene called human epidermal growth factor receptor 2 (HER2) to grow and have many copies of the HER2 gene or high levels of the HER2 protein; they can be HR+ or HR-; cancers with no or low levels of HER2 protein or no or low copies of HER2 gene are called HER2-negative (HER2-)

3) Triple negative breast cancer (TNBC): 15-20% of breast cancers do not express ER, PR or HER2

Staging is a way of describing where the cancer is located, how much the cancer has grown, and if and where it has spread. The cancer stage determines the kind of treatment and can help predict the patient’s prognosis. Breast cancer staging according to the American Joint Committee on Cancer: Stage O (zero) Non-invasive: cancer only in ducts of breast tissue Stage I (A/B) Tumor <20mm, no regional lymph node or distant metasteses Stage II (A/B) Early stage: tumors 20-50mm, no lymph node or distant metasteses Stage III (A/B/C) Locally advanced: primary tumor any size, no distant metasteses Stage IV Metastatic: tumor can be any size and has spread to other organs Approximately 62% of women are diagnosed with breast cancer located only in the breast with a 5-year survival rate of 99%. If the cancer has spread to a distant part of the body (metastatic) the 5-year survival rate drops to 27%. Surgery is generally recommended for non-invasive and early stage invasive breast cancer to remove the tumor. For larger tumors or those that are growing quickly systemic treatment with chemotherapy or hormonal therapy before surgery (neoadjuvant therapy) is recommended. Treatment after surgery (adjuvant therapy) with the goal to lower the risk of recurrence by destroying any remaining undetectable cancer cells includes radiation therapy and systemic drugs such as chemotherapy, targeted therapy, and/or hormonal therapy. Thereafter, several treatment lines (e.g. 1st, 2nd, 3rd line) are given in cycles when breast cancer progresses. Combination treatment regimens for HER2- breast cancer The most prescribed treatment regimens in different settings for metastatic HER2-negative breast cancer include: Neo/adjuvant Chemotherapy/hormonal therapy (tamoxifen, aromatase inhibitor (AI)) Metastatic HR+ Hormonal therapy: 1L: Ibrance + AI; AI, tamoxifen, Afinitor +

exemestane or Faslodex); 2&3L: Ibrance + Faslodex or AI; Faslodex; Afinitor + exemestane or Faslodex or tamoxifen; exemestane Chemotherapy or targeted: 1L: chemotherapy; 2L: Abraxane; 3L: Abraxane or Halaven; 4L: Ixempra; 5L: Verzenio/Halaven

Metastatic TNBC 1L: chemotherapy (generic followed by branded); 2L: Tecentriq + Abraxane; 2&3L: Abraxane/Halaven/Ixempra; PARP inhibitors

15 September 2020


Income Statement

NOTE: On 31 December 2019, Polyphor had a total of CHF 231 mn unrecorded tax loss carryforwards, which we anticipate the company will be able to use on future profits.

POLYPHOR SHARE PRICE (CHF) 7.57

IFRSINCOME STATEMENT (CHF MN) 2019 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029EPRODUCT SALES (INCL. PARTNER SALES) 0 0 0 0 31 112 264 458 623 737 799CHANGE (%) 260% 135% 74% 36% 18% 8%

ROYALTIES 0.0 0.0 0.0 0.0 5.5 19.7 45.8 80.1 110.3 131.1 144.2CHANGE (%) 260% 133% 75% 38% 19% 10%

UPFRONT AND MILESTONE PAYMENTS 0.0 13.9 4.0 59.3 46.4 57.8 80.7 68.6 43.6 0.0 1.9CHANGE (%) -100% -71% 1383% -22% 24% 40% -15% -36% -100%

OTHER REVENUES 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0CHANGE (%) -100% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%

REVENUES (EXCL. PARTNER SALES) 0.0 13.9 4.0 59.3 51.9 77.5 126.5 148.7 153.9 131.1 146.0CHANGE (%) -100% 138596% -71% 1380% -13% 49% 63% 18% 3% -15% 11%

COGS 0 0 0 0 0 0 0 0 0 0 0CHANGE (%)

GROSS PROFIT 0.0 13.9 4.0 59.3 51.9 77.5 126.5 148.7 153.9 131.1 146.0CHANGE (%) -100% 138596% -71% 1380% -13% 49% 63% 18% 3% -15% 11%MARGIN (%) 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

RESEARCH & DEVELOPMENT -60.7 -55.0 -51.1 -35.7 -33.2 -37.3 -35.4 -34.5 -34.6 -34.7 -34.8CHANGE (%) 36% -9% -7% -30% -7% 12% -5% -3% 0% 0% 0%

MARKETING & SALES -1.4 -1.0 -1.0 -1.0 -1.1 -1.1 -1.1 -1.1 -1.1 -1.2 -1.2CHANGE (%) 55% -31% 2% 2% 2% 2% 2% 2% 2% 2% 2%

GENERAL & ADMINISTRATIVE -4.7 -5.0 -5.1 -5.2 -5.3 -5.4 -5.5 -5.6 -5.7 -5.9 -6.0CHANGE (%) 73% 7% 2% 2% 2% 2% 2% 2% 2% 2% 2%

OTHER INCOME 1.9 2.0 4.0 4.0 4.0 1.0 1.0 1.0 1.0 1.0 1.0

OPERATING COSTS -64.9 -59.0 -53.2 -37.9 -35.6 -42.8 -41.0 -40.3 -40.5 -40.7 -41.0CHANGE (%) 35% -9% -10% -29% -6% 20% -4% -2% 1% 1% 1%OPERATING COSTS (PER MONTH) 5.4 4.9 4.4 3.2 3.0 3.6 3.4 3.4 3.4 3.4 3.4

EBIT -64.9 -45.1 -49.2 21.4 16.3 34.7 85.5 108.4 113.4 90.4 105.1CHANGE (%) 56% -31% 9% -144% -24% 113% 147% 27% 5% -20% 16%MARGIN (%)

EBITDA -62.6 -42.7 -46.8 23.9 18.8 37.2 88.1 111.1 116.1 93.1 107.9CHANGE (%) 58% -32% 10% -151% -21% 98% 137% 26% 4% -20% 16%MARGIN (%) -623634% -307% -1167% 40% 36% 48% 70% 75% 75% 71% 74%

D&A 2.3 2.4 2.4 2.5 2.5 2.6 2.6 2.7 2.7 2.8 2.8

NET FINANCIAL INCOME/(EXPENSES) 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7 0.7

NET FOREIGN EXCHANGE PROFIT / (LOSS) -0.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

PROFIT/LOSS BEFORE TAXES -64.7 -44.4 -48.5 22.1 17.0 35.3 86.1 109.1 114.1 91.1 105.8CHANGE (%) 41% -31% 9% -146% -23% 108% 144% 27% 5% -20% 16%MARGIN (%) -644137% -319% -1210% 37% 33% 46% 68% 73% 74% 69% 72%

TAXES 0 0 0 0 0 0 0 -6 -14 -18 -21TAX RATE (%) 0% 0% 0% 0% 0% 0% 0% 5% 12% 20% 20%

NET PROFIT/LOSS -64.7 -44.4 -48.5 22.1 17.0 35.3 86.1 103.3 99.8 72.9 84.5CHANGE (%) 27% -31% 9% -146% -23% 108% 144% 20% -3% -27% 16%MARGIN (%) -644137% -319% -1210% 37% 33% 46% 68% 69% 65% 56% 58%NET PROFIT/LOSS (EXCLUDING MILESTONES) -64.7 -58.3 -52.5 -37.2 -29.5 -22.5 5.5 34.7 56.3 72.9 82.6MARGIN (%) -644137% -419% -1309% -63% -57% -29% 4% 23% 37% 56% 57%

EPS (CHF) -5.85 -4.01 -4.38 2.00 1.54 3.19 7.79 9.34 9.02 6.59 7.64CHANGE (%) 8% -31% 9% -146% -23% 108% 144% 20% -3% -27% 16%ESTIMATES AS OF 15 SEPTEMBER, 2020 SOURCE: VALUATIONLAB ESTIMATES

15 September 2020


Ratios | Balance Sheet | Cash Flow Statement

NOTE: We calculate that Polyphor will need a total cash injection of around CHF 20 mn (roughly a third of our previous assumption thanks to the Fosun Pharma USD 15 mn upfront milestone) to fully develop its key pipeline projects up to phase III and reach profitability expected in 2022/2023. Polyphor plans to raise these additional funds when it reaches key value inflection points including the two co-primary endpoints ORR (Q2 2021) and PFS (Q4 2021) of the single pivotal phase III “FORTRESS” trial of balixafortide in metastatic breast cancer at far higher share prices to minimize share dilution. On positive “FORTRESS” trial results Polyphor plans to partner balixafortide to a major cancer player in return for considerable upfront, development and commercial milestones and royalties on sales in H1 2022. The company already out licensed the Chinese rights to Fosun Pharma for excellent terms in August 2020.

POLYPHOR SHARE PRICE (CHF) 7.57

IFRSRATIOS 2019 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029EP/E -1.9x -1.7x 3.8x 4.9x 2.4x 1.0x 0.8x 0.8x 1.1x 1.0xP/S 6.0x 20.9x 1.4x 1.6x 1.1x 0.7x 0.6x 0.5x 0.6x 0.6xP/NAV 13.8x -4.2x 18.4x 3.5x 1.4x 0.6x 0.3x 0.2x 0.2x 0.2xEV/EBITDA -0.8x -0.8x 1.5x 1.9x 1.0x 0.4x 0.3x 0.3x 0.4x 0.3x

PER SHARE DATA (CHF) 2019 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029EEARNINGS -5.85 -4.01 -4.38 2.00 1.54 3.19 7.79 9.34 9.02 6.59 7.64CHANGE (%) 8% -31% 9% -146% -23% 108% 144% 20% -3% -27% 16%CASH 7.00 2.57 0.21 2.43 4.19 7.61 15.64 25.21 34.48 41.32 49.21CHANGE (%) -51% -63% -92% 1078% 73% 82% 105% 61% 37% 20% 19%DIVIDENDS 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00PAYOUT RATIO (%) 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%NET ASSET VALUE 4.99 0.55 -1.81 0.41 2.17 5.60 13.62 23.20 32.46 39.30 47.19CHANGE (%) -61% -89% -430% -123% 429% 158% 143% 70% 40% 21% 20%

BALANCE SHEET (CHF MN) 2019 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029ENET LIQUID FUNDS 77.4 28.4 2.3 26.8 46.3 84.2 173.0 278.9 381.5 457.1 544.4

TOTAL ASSETS 92.8 43.7 17.6 42.2 61.7 99.6 188.3 294.3 396.8 472.5 559.8

TOTAL SHAREHOLDERS' EQUITY 55.1 6.1 -20.0 4.5 24.0 61.9 150.7 256.6 359.2 434.8 522.1CHANGE (%) -54% -89% -430% -123% 429% 158% 143% 70% 40% 21% 20%RETURN ON EQUITY (%) -117% -731% 242% 487% 71% 57% 57% 40% 28% 17% 16%

TOTAL EQUITY 55.1 6.1 -20.0 4.5 24.0 61.9 150.7 256.6 359.2 434.8 522.1

FINANCIAL DEBT 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

EMPLOYEES 63 48 49 50 51 52 53 54 55 56 57 CHANGE (%) 7% -24% 2% 2% 2% 2% 2% 2% 2% 2% 2%

CASH FLOW STATEMENT (CHF MN) 2019 2020E 2021E 2022E 2023E 2024E 2025E 2026E 2027E 2028E 2029ENET PROFIT / (LOSS) -64.7 -44.4 -48.5 22.1 17.0 35.3 86.1 103.3 99.8 72.9 84.5DEPRECIATION & AMORTIZATION 2.3 2.4 2.4 2.5 2.5 2.6 2.6 2.7 2.7 2.8 2.8OTHER NON-CASH ITEMS 6.4 -7.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

NET CASH USED IN OPERATING ACTIVITIES -56.0 -49.0 -46.1 24.6 19.5 37.9 88.8 106.0 102.5 75.7 87.3

CASH FLOW FROM INVESTING ACTIVITIES 1.4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

FREE CASH FLOW -54.6 -49.0 -46.1 24.6 19.5 37.9 88.8 106.0 102.5 75.7 87.3

CASH FLOW FROM FINANCING ACTIVITIES -1.5 0.0 20.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

CHANGE IN LIQUID FUNDS -56.1 -49.0 -26.1 24.6 19.5 37.9 88.8 106.0 102.5 75.7 87.3


15 September 2020


APPENDIX Pharmaceutical life cycle To determine the value of a prescription (bio)pharmaceutical compound, it is critical to understand its life cycle. Fortunately, all compounds follow the same life cycle. The clock starts ticking after the compound is patented, providing 20 years of protection from generic competition. Market exclusivities can extend this protection period. Additional protection is provided by orphan drug status (10 years in EU, 7 years in US). The average Research & Development Phase takes 8-14 years, leading to an effective Return Phase of 6-12 years. The Development Phase has 3 distinct Phases, focused on safety (Phase I), dose (Phase II) and efficacy/clinical benefit (Phase III). The compound is filed for registration/approval at the FDA (US) or EMA (EU). The Return Phase is characterized by a star, cash cow, and mature phase. After patent expiry (or loss of market exclusivity) generic manufacturers may copycat the branded prescription drug, at significantly lower costs, leading to a sales and earnings implosion of the branded drug.

Success Probabilities & Royalties In our risk-adjusted NPV calculations, we use standardized success probabilities based on historical clinical success rates. The success rate increases as the project progresses through development. Sales and earnings forecasts are based on the clinical and competitive profile of the compound. The more advanced the compound is, the more accurate the forecasts become as the target market can be defined. We conservatively exclude projects that lack Phase IIa proof-of-concept data in our valuations.

SUCCESS PROBABILITIES & ROYALTIESDEVELOPMENT STAGE AIM WHAT / WHO

SUCCESS PROBABILITY (%)

COSTS(USD MN)

ROYALTIES (%)

PRE-CLINICAL SAFETY & PHARMACOLOGY DATA LAB TESTS / ANIMALS - NO HUMANS! < 5 3PHASE I SCREENING FOR SAFETY HEALTHY VOLUNTEERS (10'S) 5-15 3 < 5PHASE IIA PROOF-OF-CONCEPT PATIENTS WITH DISEASE (10'S) 10-20PHASE II ESTABLISH THE TESTING PROTOCOL PATIENTS WITH DISEASE (100'S) 15-35 5 5-15PHASE IIB OPTIMAL DOSAGE PATIENTS WITH DISEASE (100'S) 20-45 5-10PHASE III EVALUATE OVERALL BENEFIT/RISK PATIENTS WITH DISEASE (1,000'S) 40-65 > 20-1,000 10-25REGULATORY FILING DETERMINE PHYSICIAN LABELING CLINICAL BENEFIT ASSESSMENT 80-90APPROVAL MARKETING AUTHORIZATION PHYSICIANS FREE TO PRESCRIBE 100 15-30

SOURCE: VALUATIONLAB, TUFTS, FDA, EMA, CLINICALTRIALS.GOV

~ 10-14! 20! YEARS!

RESEARCH & DEVELOPMENT PHASE! RETURN PHASE! EXPIRY!

REG

ISTR

ATIO

N!

PHAS

E III!

PHAS

E II!

PHAS

E I!

PRE-

CLIN

ICAL!

SAFETY! DOSE! EFFICACY / APPROVAL!

“STAR”! “CASH COW”! “DOG”!~10%! 10% -45%! 40% - 65%! ~80%!

BREAKEVEN!

GENERICS!

! RISK-ADJUSTED DISCOUNTED CASH FLOW " !

SUCCESS <5%!

ANIMALS! ~10s! ~ 100s! ~ 100s – 1,000s PTS!

BIO-SIMILARS !

COSTS!

SALES!p<0.05!

P/E >20x! P/E ~10-15x! P/E > 6-10x!

“MATURE”!

P/E ~ 15x!

0!

SOURCE: VALUATIONLAB!

PHARMACEUTICAL LIFE CYCLE!

15 September 2020


Important Research Disclosures valuationLAB AG is an independent life science research boutique with no securities or banking services. The company does not hold any positions in the securities mentioned in this report. Our financial analyses are based on the "Directives on the Independence of Financial Research" issued by the Swiss Bankers Association in January 2008. Purpose of the Research This research report has been commissioned by Polyphor AG and prepared and issued by valuationLAB AG for general circulation and is circulated for general information only. This document has been furnished to you solely for your information and may not be reproduced or redistributed to any other person. Information has been obtained from publicly available sources believed to be reliable but no representation or warranty, either expressed or implied, is provided in relation to the accuracy, completeness or reliability of the information contained herein. Views and estimates constitute our judgment as of the date of this report and are subject to change without notice. Past performance is not indicative of future results. This research report is not intended as an offer or solicitation for the purchase or sale of any financial instrument. Securities, financial instruments or strategies mentioned herein may not be suitable for all investors. The views and recommendations herein do not consider individual client circumstances, objectives, or needs and are not intended as recommendations of particular securities, financial instruments or strategies to particular clients. The recipient of this research report must make his or her own independent decisions regarding any securities or financial instruments mentioned herein. The information contained herein is directed exclusively at market professionals and institutional investors and does not apply to, and should not be relied upon by, private clients. valuationLAB AG accepts no liability for any loss or damage of any kind arising out of the use of this research report or its contents. This research report is not directed to or intended for distribution to or use by any person or entity in any jurisdiction where such distribution, publication or use would be unlawful. By accepting this document, you agree to be bound by the foregoing limitations. Achievement of the (risk-adjusted) Fair Value Recipients of this research report should seek financial advice regarding the appropriateness of investing in any security; financial instrument or strategy discussed in this report and should understand that future (risk-adjusted) fair values may not be realized. The (risk-adjusted) fair value estimate is based on a number of factors and assumptions. It should be noted that if any of these are inaccurate or are not achieved, it might be necessary to adjust the fair value. Investors should note that income from such securities or financial instruments or strategies, if any, may fluctuate and that each security’s price or value may rise or fall. Accordingly, investors may receive back less than originally invested. Foreign currency rates of exchange may adversely affect the value, price or income of any security or related investment mentioned in this research report. In addition, investors in securities such as ADRs, whose values are influenced by the currency of the underlying security, effectively assume currency risk. Fair values for stocks under coverage are calculated by submitting the analyst(s)’ financial projections to one or more of a variety of valuation approaches. These include “absolute” methodologies such as DCF and NPV modeling, as well as relative methodologies such as peer group and market valuation multiple comparisons. Risk Qualification Speculative less than 1 year cash and breakeven beyond 1 year High Risk profitable within 2 years and 1 approved product/key indication (patent expiry > 5 years) Medium Risk profitable and/or sales from at least 2 marketed products/key indications (patent expiry > 5 years) Low Risk profitable and sales from >2 marketed products/key indications (patent expiry > 5 years) Analyst Certification The research analyst(s) identified on the first page of this research report hereby attest that all of the views expressed in this report accurately reflect their personal views about any and all of the subject securities or issuers. In order to ensure the independence of our research analysts, and their immediate household, are expressly prohibited from owning any securities in the valuationLAB AG research universe, which belong to their sector(s). Neither the research analyst nor his/her immediate household serves as an Officer, Director or Advisory Board Member of Polyphor AG. Copyright 2020 VALUATIONLAB AG All rights reserved. FELSENRAINSTRASSE 17 | 8832 WOLLERAU | SWITZERLAND | WWW.VALUATIONLAB.COM | P: +41 79 652 67 68

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